Strategic Analysis

Ideas for Today and Tomorrow

Fernanda Bravo

Pedro DeHoyos

David Lerma

Haldun Unal

Linda Gamez
 Introduction

§ Give an overview of Exxon Mobil



§ Identify what strategies Exxon has taken

today and what is needed for tomorrow
•
•
 Agenda

 External Analysis  Internal

 Analysis

§ Customer
§ Environmental § Performance
§ Market § Determinants
§ Competitor
–
 History
• Exxon Mobil Corporation is the second largest integrated oil company in the
world
•
§ The company is involved in oil and gas exploration, production,
transportation, and marketing in more than 200 countries and territories.
§
§ Exxon Mobil is a major manufacturer of basic petrochemicals, such as
olefins, aromatics, and polyethylene and polypropylene plastics.
§
§ The company supplies refined products to more than 40,000 service
stations operating under the brand names Exxon, Mobil, and Esso.
Created from the 1999 merger of Mobil Corporation and Exxon
Corporation, Exxon Mobil's history is the story of two companies, each
an influential constituent of modern business history.
 Overview

• Give the big picture of the strategies

• Explain how all the individual topics come
together
 Environmental

• Technological
– New technologies & new operating
practices
– Decrease emissions
– Efficiently inspecting of equipment
• Economic
– Waste management
– Managing of water use
 Partnerships

• Exxon is also in the oil and gas transport business; on April 11th,
2008, it announced that it would join the partnership with
ConocoPhillips and Chevron to build a pipeline that would span
from the North Slope of Denali in Alaska through Canada and
into the U.S
•
• The total cost of the project is estimated at $20 billion, and will
require over 1000 government permits in both countries, but the
returns could be massive, as the gas shipped by the line has the
potential to meet 8% of total U.S. gas demand[2] .
•
 Market

THE ENERGY SECURITY PROBLEM



 Current market price probably tied to a “perfect

storm” of unfortunate events – more than declining
reserves (Peak Oil)
• Longer term energy security problem remains “a
concentration of low cost reserves among relatively
few players.”
• This concentration of low cost reserves poses risks to
the US (wealth transfers, price spikes)
• Focus on import dependence not likely to fundamentally
address energy security problem and can be costly.
Policy focus should be on reducing vulnerability.
•
Market
 Investment in refinery upgrades

• Make high specification products

• Make cleaner gasoline
• Make gasoline for ethanol blending
• Make ultra-low sulfur diesel (ULSD)
• Make across-the-board sulfur reduction
• Adjust to declining crude quality
• Reduce refinery site emissions
 Competitive Industry Overview

• Macroeconomic Factors
• ExxonMobil Competitive Advantages
• Competitors in the Oil Industry
• XOM Rate of Returns versus Competition
• OPEC
•
 U.S. Macro Impacts of Oil Industry

• Decrease in Economic Growth

• Decrease in Consumer Spending
• Higher Unemployment Rates
• Higher Inflation Rates
• Increase in Trade Deficit
ExxonMobil Industry Strengths
Super Majors of the Oil Industry
XOM vs. Competitors
OPEC
Increasing Revenue
Divisions and Geographic
Segments
EBITDA
ROCE
Cash Flow
Dividends
 Determinants of Strategic Options
Past Strategies (2005)
Upstream -


• Identify and pursue all attractive exploration opportunities

• Invest in projects that deliver superior returns
• Maximize profitability of existing oil and gas production
• Capitalize on growing natural gas and power markets


Downstream -


• Global Scale and Integration

• Margin Enhancement
• Operating Cost Efficiency
• Capital Discipline
 Chemical Business -

• Long-term strategy built on Exxon Mobil's core

competencies
• Unique portfolio of global integrated businesses
• Strong synergies with upstream and
downstream operations
• Technology leadership
• Focus on cost management, reliability and
efficiencies
• Disciplined investment in advantaged projects
 Current Strategies (2007)
• Meeting the world’s fundamental and growing need for energy is a massive
undertaking.
•
• Providing reliable, affordable energy supplies in a responsible manner
enables global economic progress and improves the quality of life for
people around the world. Exxon Mobil remains uniquely positioned to
take on the key challenges facing our industry today:
•
• Safely and reliably producing oil, natural gas, and hydrocarbon products
• Finding and developing new supplies and products to bring to market
•
• Maximizing resource and asset value
•
• Improving energy efficiency and minimizing environmental impacts
•
• Developing the next generation of scientists and engineers
 Current Strategies (2007)


 Upstream


• Identify and pursue all attractive exploration opportunities

• Invest in projects that deliver superior returns
• Maximize profitability of existing oil and gas production
• Capitalize on growing natural gas and power markets


 Downstream


• Maintain best-in-class operations, in all respects

• Provide quality, valued products and services to our customers
• Lead industry in efficiency and effectiveness
• Capitalize on integration with other Exxon Mobil businesses
• Selectively invest for resilient, advantaged returns
• Maximize value from leading-edge technology


•
•
 Current Strategies (2007)


Chemical


• Focus on businesses that capitalize on core competencies

• Capture full benefits of integration across Exxon Mobil operations
• Consistently deliver best-in-class performance
• Selectively invest in advantaged projects
• Build proprietary technology positions
•
•
 Objectives

 For healthly and continous revenue

growth
– Supporting fuel efficiency techology
– Supporting alternative energy sources


 Cost reduction & profit maximization

– Selling of the retail business


 Improving technologies for exploration

on exsisting fields & acquiring new
reserves
•
Questions