BGS CASE STUDY

Prof DEVAPRASAD
EXXON MOBIL CORPORATION

SUBMITTED BY
DONY JOSE (1020311),3RD MBA D
 CASE SUMMARY
ExxonMobil is the largest publically traded international oil
company. Main business is discovering, producing, and selling oil and natural gas,
and it has a long record of profiting more at this business than its rivals. Standard
Oil Trust incorporated in 1882 by John D. Rockefeller as Standard oil of New
Jersey. He was a brilliant strategist and organizer who crushed competitors. He
emphasized cost control, efficiency, centralized organization, and suppression of
competitors. Although Rockefeller’s influence is buried in the passage of time,
ExxonMobil’s actions remain consistent with his nature.

Standard Oil’s power so offended public values that in 1890 Congress

passed the Sherman Antitrust Act to end the monopoly of the company .After long
legal battles 1911 the trust is broken into 39 separate companies. In 1999 Exxon
merged with Mobil to form Exxonmobil. In the company profit is the overriding
goal and project must meet strict criteria for the return on investment. Performance
pressure is so intense in the company that the “is not a fun place to work”. The
company says simple that it “employs all methods of competition which are lawful
and appropriate”.

To make profits the company pursues new reserves wherever they are
located, taking political risks and abiding unrest and corruption. In Chad, Angola,
Nigeria and Equatorial Guinea it paid dictators bribes for the oil. In Iran and
Venezuela their properties were appropriated and rebels attacked the properties in
Indonesia. In 2006 it supported by governments by paying 101 billion dollars
worldwide, a sum exceeding the combined revenues of Dell and Microsoft.

For years the company has agitated environmentalists by rejecting the

scientific case for global warming. In 1997 Raymond (CEO) rejected scientific
case of global warming and calls renewable energy “a complete waste of money”.
ExxonMobil got a good public caning because for years it funded the research of
groups that denied global warming. In 2006 Britain‘s scientific academy, the Royal
Society, took the unprecedented step of writing to the company’s management,
asking that it stop “misinforming the public”.

The CEO Rex Tillerson did not make any notable strategic changes. His
reversal of belief failed to satisfy the critics especially ExxposeExxon, a coalition
of environmental groups that opposes the company‘s policies. The coalition
includes Defenders of Wildlife, Greenpeace, the Natural resources defense council,
the Sierra club and the union of the concerned scientists.

As a corporate citizen ExxonMobil funds worldwide programs to benefit,

education, communities, health, nature and the arts. In 2006 Exxon gave 139
million dollars towards these efforts..This is a very large sum in the perspective of
an individual .However for Exxon it was one-twenty-sixth of one percent of its 366
billion revenues, the equivalent of a person making 1 million dollars a year giving
385 dollars to charity.

PROBLEM IDENTIFICATION
The current strategy of Exxon Mobil business is worth in the modern world
without considering the social contract between the business and the society?

CASE ANALYSIS
The case analysis starts with the one of the great person John D Rockfeller ,
who is considered to be one of the great philanthropist in the twentieth century. But
the business started by him Standard oil of New Jersey later named as ExxonMobil
in 1999 is notorious for their lobbying activities all around the world. They have
the dominance model of the BGS relationship in the at the end of the nineteenth
century. They bought the politicians, senators, congress of United States under
them and crushed the competitors.

So offended by the public values the congress passed Antitrust act to outlaw
its monopoly thereafter the trust broken to 39 separate companies. But still by the
loop holes in laws and heavy lobbying they remained the largest oil company in
the world. This shows the unethical relations between business and government in
the policy making. This is still existing in the modern world were governments
make rules and policies without any sincerity and trying to fool the public.

The employee performance pressure at Exxon Mobil is so intense that it

created a general feeling in the public that “is not a fun place to work”. The
company may be making profit but the new talents will be kept away from the firm
and in long run it will lead to deteoriating efficiency of the management .So it is
important to have good brand image in the society. Otherwise the factors in society
will cause harm to the business.

To make profits the company pursues new reserves wherever they are
located, taking political risks and abiding unrest and corruption. In Chad, Angola,
Nigeria and Equatorial Guinea it paid dictators bribes for the oil. In the short run it
will be profitable for the company but in the long run the company will face
troubles. It happened in Iran and Venezuela their properties were appropriated and
rebels attacked the properties in Indonesia. The amount of media impact in these
cases causes company suspicious in all the deals they are making in future. So
business should have good relation with the society and governments.

The company got good public caning for funding the research groups that denied
the global warming. This shows the ability of the business to use the talented
people to work against society by the power of money. The business people can
fool the public for only some time, which happened in Exxon also. The Britain
scientific academy informed company to stop the “misinforming the public”. So
the Exxon Company damaged the reputation of the United States in front of the
world. So if government is not taking sufficient actions against unethical business
it will damage the nation’s credibility before the world.

It is very pity to say that there is coalition of environmental groups called

ExxposeExxon that opposes the company’s policies. It is giving money to
worldwide programs but considering the revenue it is just 385 dollar for every 1
million dollars. Its shows the corporate’s fake social responsibility to the society.

The case analysis shows the need for the better relations between the
business, government and society. This is very visible in the case of the Exxon
also. The company which controlled the 90 percent of oil market in US is now far
below the previous glory. This shows the need for the good relations for the
business between the government and the society. This is the significance of the
countervailing forces model in the modern society.
CONCLUSION
The entire growth of the company in the modern world depends on the good
relations with the society and the government. The influence of the society is now
increasing in modern times by the activities of the social workers and the
environmentalists. So the modern business should be based on the value system in
society that is fulfilling the invisible social contract between business and society.