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ExxonMobil SWOT Analysis

Kevin Sessions

University Of Arizona Global Campus

Eric Smithson

BUS 402 Strategic Management & Business Policy

February 7, 2023

ExxonMobil SWOT Analysis

Company's s History

ExxonMobil is an American multinational oil and gas corporation. It was established in 1999 through the merger of Exxon and Mobil. The company is in over 75 countries and is engaged in the exploration, production, transportation, and marketing of oil, natural gas, and petrochemicals. ExxonMobil's primary products include gasoline, diesel, jet fuel, natural gas, lubricants, asphalts, and petrochemicals. It also produces and markets specialty products such as waxes, lubricants, and other chemicals. The company has also seen a shift in its focus from oil and gas to petrochemicals, investing heavily in the sector and expanding its product offerings (Li et al.,2022). ExxonMobil has a long history of innovation and has been at the forefront of technological advancements in the energy industry. The company has invested heavily in developing renewable energy sources, such as wind and solar, and has also explored using hydrogen as a fuel source. Furthermore, ExxonMobil has been a leader in developing advanced technologies, such as its proprietary XH2 technology, which enables hydrogen production from natural gas.

ExxonMobil's competitors include Chevron, BP, Royal Dutch Shell, Total SA, and ConocoPhillips. These companies are all involved in exploring, producing, refining, and marketing oil and gas products. They compete directly with ExxonMobil to produce and sell oil, natural gas, and petrochemicals. ExxonMobil competes with other major players in the petrochemical and chemical sectors, such as Dow Chemical, BASF, and DuPont.

Financial Performance and Condition of ExxonMobil

ExxonMobil has adopted several strategic initiatives to drive long-term growth. It has focused on cost reduction, efficiency improvement, capital discipline, and portfolio optimization. The company has also been investing in technology to enhance its operations and increase its competitive advantage. ExxonMobil has also been focusing on transitioning to a lower-carbon future. It has set a goal of reducing greenhouse gas emissions by 15% absolute by 2025 and has invested over $10 billion in low-carbon technology since 2000.

ExxonMobil's financial performance for the past few years has been steady, with the company consistently outperforming the industry regarding revenue, earnings, and cash flow. However, the company's financial performance in 2020 was primarily influenced by the impact of the coronavirus pandemic. The company's revenue decreased significantly due to oil prices and decreased demand. In 2020, ExxonMobil's total revenue was $181.5 billion, a decrease compared to the previous year's revenue of $ 264.9 billion.

Since then, the company's financial performance has been increasing due to the decline in Covid 19 and increased demand for its products. The company reported a substantial total revenue in 2021 and 2022, amounting to $ 285.6 billion and $ 413.6 billion, respectively.

In 2022, ExxonMobil reported a net income of $55.7 billion, an increase from a net profit of $20.59 billion in 2021. Higher crude oil prices, increased production, and improved refining margins drove this. ExxonMobil has a strong balance sheet, with assets of over $338.9 billion and liabilities of just over $163.2 billion as of the end of 2022. The high total assets position of ExxonMobil reduces the risk and increases the competitiveness of the company.

ExxonMobil SWOT Analysis

The SWOT analysis is a strategic planning technique used to identify an organization or business venture's strengths, weaknesses, opportunities, and threats. It is an acronym for Strengths, Weaknesses, Opportunities, and Threats. It is an effective tool for assessing an organization's current position and potential future performance (David et al.,2019). The SWOT analysis is vital to the organization because it provides a comprehensive overview of its current position and potential future performance. It helps the organization to identify its strengths, weaknesses, opportunities, and threats and develop strategies for capitalizing on its strengths and opportunities while minimizing its weaknesses and threats. The four core areas in the SWOT analysis of ExxonMobil are provided in the following template.

	SWOT Analysis
		Environment
				Opportunity
EXXONMOBILE	Strength	i. Diversification of its products and services with a large market presence in more than 75 countries ii. Vertical integration strategy iii. Heavy investment in Research and Development		i) Global expansion ii) Sustainable development iii) Increasing demand for green energy
				Threats
	Weakness	i. Ethical and human rights conflict ii. Environmental and social impacts concerns iii. Legal battles and controversies		i) Covid 19 pandemic ii) The political tension iii) Increased demand for eco-friendly fuel

SWOT Analysis

Strengths

Diversification strategy: The company’s success is primarily due to its diversification strategy. ExxonMobil has diversified its operations into a wide range of sectors, including upstream, midstream, and downstream activities, petrochemicals, and chemicals. By diversifying its operations, ExxonMobil can reduce its risk by spreading it out over multiple businesses, which can be especially beneficial in volatile markets. Diversification has also allowed ExxonMobil to expand its presence across the globe. ExxonMobil has expanded its presence into more than 150 countries by diversifying its operations and expanding into new markets. It has allowed the company to benefit from economies of scale and gain access to new customers, suppliers, and resources.

Vertical Integration: ExxonMobil is a multinational oil and gas company with significant growth through strategic integration. The company utilizes vertical integration to control production from start to finish (Varga et al.,2021). This approach allows ExxonMobil to maximize efficiency and reduce costs by controlling each supply chain step. It also gives the company control over the quality of its products and increased access to capital. ExxonMobil has long used vertical integration to increase its oil exploration and production activities. The company has acquired and developed oil fields, pipelines, and other upstream facilities worldwide, allowing it to develop and refine oil globally.

Research and development: ExxonMobil is a global leader in research and development (R&D) investments, having invested billions of dollars in developing new products, technologies, and processes (Varga et al.,2021). This investment has enabled ExxonMobil to be at the forefront of new energy solutions, resulting in a vast portfolio of products and services. With an increased sustainability campaign, the company has been researching how to reduce its carbon footprint.

Weaknesses

Ethical and human rights issues: ExxonMobil has been involved in several lawsuits that claim the company knowingly perpetuated human rights violations, such as brutality, murder, and rape, through fraudulent employee transactions. These lawsuits have further harmed the firm and created a public image that ExxonMobil is not socially responsible and does not care about the human rights of its workforce.

Environmental and social concerns: ExxonMobil has a long history of environmental and social concerns related to its operations. One of the primary environmental concerns is the company's History of oil spills, which have polluted water and soil and threatened fragile ecosystems and wildlife. These spills have caused significant damage to marine life, shorelines, and fishing industries in areas where ExxonMobil operates (Rajaraman,2022). The company was criticized for using hydraulic fracturing, which involves injecting large amounts of water, sand, and chemicals into the ground to access oil and gas reserves. This process has been linked to increased seismic activity and air and water pollution.

Legal battles and controversies: ExxonMobil has also faced numerous legal and regulatory challenges related to its operations, particularly in areas where it operates in developing countries. For example, the company has been accused of unsafe operating and polluting local environments in Nigeria, Indonesia, and Equatorial Guinea (Rajaraman,2022). These legal battles and controversies have had a significant impact on the operations of ExxonMobil. The company has had to pay billions of dollars in damages and fines, significantly impacting its bottom line. In addition, the legal and regulatory challenges have made it more difficult for the company to operate in certain areas and have created a cloud of uncertainty over how the company will be able to operate in the future.

Opportunities

Global expansion: ExxonMobil has numerous opportunities to increase its market share, expand its operations, and grow its profits. Through global expansion, ExxonMobil can access new markets, increase production, and exploit different resources. By entering new markets, ExxonMobil can increase its customer base and sales while introducing its products and services to a new customer base (Kim & Kim, 2020). Additionally, ExxonMobil can reduce transportation, storage, and production costs by expanding operations to new countries and regions. It can lead to increased efficiency and increased profits. For instance, the company has expanded its operations at Guyana second offshore.

Demand for green energy: ExxonMobil has been actively exploring and investing in solutions to capitalize on the increasing demand for green energy. Through its operations, ExxonMobil could develop renewable energy sources such as wind and solar, bringing new energy sources to the market. It will allow ExxonMobil to diversify its energy portfolio and provide clean energy to its customers. ExxonMobil has also committed to reducing its greenhouse gas emissions by 15% by 2025 (Supran et al.,2023). It will help the company reduce its carbon footprint and reliance on fossil fuels.

Sustainability: One of the main opportunities that ExxonMobil can take advantage of when it comes to sustainable development is increased efficiency. The company can reduce energy and water consumption and waste production by focusing on sustainability. It helps reduce their operations' environmental impact and saves money on energy and water bills. In addition, ExxonMobil can also use renewable energy sources to power its operations, which can lead to cost savings.

Threats

Covid-19 pandemic: ExxonMobil, as an oil and gas company, is facing multiple operational threats from the Covid-19 pandemic. More significantly, the drop in global oil and gas demand due to the Covid 19 pandemic has had an immediate and drastic impact on ExxonMobil’s oil and gas prices, which have dropped significantly in many markets. In addition, the pandemic caused a decrease in ExxonMobil’s exports, as travel restrictions and border closures made it more difficult for the company to move its products to international markets.

Political tension: The political tension between Russia and Ukraine has significantly impacted ExxonMobil's operations. The company's prominent presence in the region is in the Black Sea, where it has operated for decades, producing oil and gas from shallow and deep-water offshore fields. However, the conflict between the countries has caused several issues for ExxonMobil. First, the conflict has created significant delays in developing new oil and gas projects, as both sides are unwilling to cooperate in granting permissions and access. It has caused significant delays to ExxonMobil's production plans, resulting in reduced profits and revenues.

Increased demand for eco-friendly fuel: ExxonMobil's operations would be significantly affected by increased demand for eco-friendly fuel. The company would need to invest in research and development of new technologies to make their existing fuel sources more environmentally friendly. It would involve significant capital investment and a shift in operations to focus on green fuel production. The company would also need to invest in infrastructure and equipment to produce and distribute eco-friendly fuel.

Conclusion

The SWOT analysis of ExxonMobil demonstrates that despite the challenges, the company has remained competitive in the industry by leveraging its strengths of diversification and vertical integration to reduce the threats and increase growth.

References

David, F. R., Creek, S. A., & David, F. R. (2019). What is the key to effective SWOT analysis, including AQCD factors? SAM Advanced Management Journal,  84(1), 25–3.

https://search.proquest.com/openview/4c789215c77a8b288b1288e6a92710c5/1?pq-origsite=gscholar&cbl=40946

Kim, J., & Kim, J. (2020). A Review on the Operation Plan and Future Strategy of an Oil Major: Lessons from ExxonMobil’s.  Journal of the Korean Society of Mineral and Energy Resources Engineers,  57(3), 286-294.

https://www.jksmer.or.kr/articles/article/dBaW/

Li, M., Trencher, G., & Asuka, J. (2022). The clean energy claims of BP, Chevron, ExxonMobil, and Shell: A mismatch between discourse, actions, and investments. PloS one,  17(2), e0263596.

https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0263596&ref=refind

Rajaraman, S. (2022). The Legal and Social Challenges Involved in the Expansion of Multinational Operations: A Case Study of ExxonMobil Indonesia.

https://scholarcommons.sc.edu/senior_theses/528/

Supran, G., Rahmstorf, S., & Oreskes, N. (2023). Assessing ExxonMobil’s global warming projections.  Science,  379(6628), eabk0063.

https://www.science.org/doi/abs/10.1126/science.abk0063

Varga, A. L., Chandler, M. R., Cotton, W. B., Jackson, E. A., Markwort, R. J., Perkey, R. A., … & Webb, S. I. (2021, August). Innovation and integration: exploration history, ExxonMobil, and the Guyana-Suriname basin. In  Offshore Technology Conference. OnePetro.

https://onepetro.org/OTCONF/proceedings-abstract/21OTC/1-21OTC/466595

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Strategic Management and Business Policy

Student’s Name

Institution Affiliation

Professor’s Name

Course Code

Date

Strategic Management and Business Policy

General Description of the company

ExxonMobil is an American multinational oil and gas corporation headquartered in Irving, Texas. It is the world's largest publicly traded oil and gas company and one of the largest companies in the world by revenue (Kim & Kim, 2020). ExxonMobil has operations in over 140 countries and is best known for its exploration, production, refining and marketing of oil and natural gas. It also produces a variety of petrochemicals, including plastics and lubricants.

Political challenges facing ExxonMobil

The current Russia-Ukraine conflict has had a detrimental effect on the business of companies that operate in the region. For example, ExxonMobil, a publicly traded company in the USA, has had to halt its operations in the Black Sea due to economic and political sanctions imposed by the US government in response to the conflict. The company has been forced to shut down its joint venture with Rosneft, a Russian state-owned oil company, due to the sanctions (Villac Filho,2022). The sanctions have also blocked ExxonMobil from entering any new deals with Russian companies and from purchasing any new technology or equipment from Russian sources. ExxonMobil has also seen its operations in Ukraine affected by the conflict. The company has had to delay the development of the Yuzivska field due to the instability in the region. In addition, the company has had to shut down its retail operations in Ukraine, resulting in a loss of revenue for the company.

Current Performance of the company.

ExxonMobil is currently facing significant challenges due to the ongoing conflict in Ukraine and Russia. Despite the effects of a continued weak oil price, ExxonMobil’s financial performance over 2022 was still solid, with a full year revenue of $55.7 billion. However, the geopolitical tension between Russia and Ukraine has put pressure on ExxonMobil’s production and business operations in the region. The company has had to withdraw from several projects in the region, including the Black Sea and the Arctic, due to the sanctions imposed by the US and the European Union. This has resulted in a drop in ExxonMobil’s production of oil and gas, as well as a decline in its number of employees in the region (Zhiznin & Dineva,2022). In addition, ExxonMobil’s investments in Russia have been significantly reduced due to the country’s economic recession. As a result, ExxonMobil’s overall financial performance is likely to be impacted in the long-term, due to the instability caused by the conflict in Ukraine and Russia.

Impending Challenges

i. Geopolitical uncertainty: The situation in Ukraine is unpredictable and could lead to further conflict and disruption in the region. This could make it difficult for ExxonMobil to make long-term plans and investments in the region.

ii. Disruption in access to resources: Access to resources in the region could be disrupted due to the conflict, which would reduce ExxonMobil’s ability to explore and develop new energy sources.

iii. Disruption in energy supply: Any disruption in energy supply from Russia to Europe could affect ExxonMobil’s operations and revenue. This could be due to supply disruptions from Russia, or from European countries that rely heavily on Russian energy imports.

References

Kim, J., & Kim, J. (2020). A Review on the Operation Plan and Future Strategy of an Oil Major: Lessons from ExxonMobil’s.  Journal of the Korean Society of Mineral and Energy Resources Engineers,  57(3), 286-294.

https://www.jksmer.or.kr/articles/article/dBaW/

Villac Filho, P. A. (2022). The war of commodities: Russia-Ukraine conflict.

https://tesi.luiss.it/id/eprint/34820

Zhiznin, S., & Dineva, V. (2022). Security of natural gas supply in South East Europe–15 years after the first Russian–Ukrainian natural gas crisis.  Available at SSRN 4070567.

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4070567

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Hello Class!

What qualities make a future issue a "trigger"? Our textbook states that the qualities that make a future issue a trigger should be external, specific, and quantitative (Abraham, 2012). When all three qualities are present, it would be in the organization's best interest to introduce a contingency plan. A trigger is any external, quantitative variable that can affect a decision the organization has to make daily. Quantitative measures are something to keep in mind because they keep standards specific and ensure that action is taken at any time. Post a summary of your selected company and the risks you perceive based on your prior Environmental Scan and SWOT analysis. The organization that I conducted an environmental scan and SWOT analysis was ExxonMobil. Exxon is one of the world's most significant oils and natural gas refiners, with operations in over 14 countries and a distillation capacity of 136,000 barrels per day. With over 135 years of experience, its brand value ranks in the top 100 in Brand Finance with a brand value of $19 billion. The SWOT analysis I performed on Exxon reveals that a potential trigger would be the considerable competition that has led to a significant revenue fall. ExxonMobil's competitors also lead the way in more advanced technology, which they have invested heavily to provide innovative new products. Environmental regulations have become more stringent. It becomes challenging for Exxon regarding global warming, greenhouse gases, water usage, etc.

Exxon invested in new projects that will bring more recent products using the latest advanced technology but is projected to wait to launch new products for years. State the three-sentence trigger/contingency pair and justify your choice of contingency plan—external cause of trigger-Huge competition which has caused a fall in revenue. Quantitative trigger-Environment regulations have become more stringent. Contingency trigger-World economy has posed several challenges, causing a considerable decline in oil imports, and threatening their profits. In summary, ExxonMobil can utilize these strategies to adventure into new opportunities in the rising demand for energy at its peak, and expected to keep rising shortly. The need for other energy sources in the future will involve a massive percentage of renewable sources. Exxon must understand this change and prepare accordingly, with 40% of the growth in energy demand will be met by new energy sources. Exxon needs to invest in a unique technology to beat the competition.

References

Abraham, S. (2012). Strategic management for organizations. Retrieved from https://content.ashford.edu/

ExxonMobil Outlines Aggressive Growth Plans to More than Double Earnings. (n.d.). Retrieved from https://news.exxonmobil.com/press-release/exxonmobil-outlines-aggressive-growth-plans-more-double-earnings

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Week 2 Assignment SWOT Analysis

Student’s Name

Institution Affiliation

Professor’s Name

Course Code

Date

ExxonMobil SWOT Analysis

Company's s History

ExxonMobil is an American multinational oil and gas corporation. It was formed in 1999 through the merger of Exxon and Mobil. The company is in over 75 countries and is engaged in the exploration, production, transportation, and marketing of oil, natural gas, and petrochemicals. ExxonMobil's primary products include gasoline, diesel, jet fuel, natural gas, lubricants, asphalts, and petrochemicals. It also produces and markets various specialty products such as waxes, lubricants, and other chemicals. The company has also seen a shift in its focus from oil and gas to petrochemicals, investing heavily in the sector and expanding its product offerings (Li et al.,2022). ExxonMobil has a long history of innovation and has been at the forefront of technological advancements in the energy industry. The company has invested heavily in developing renewable energy sources, such as wind and solar, and has also explored us