1. Strategic Choice and Evaluation Exxon Mobil
Brenda Catron, Ashley May, Darrelle Pan, Elizabeth Patz, Bobbi Ready, Diana Velez & Hridya Warrier
STR/581
March 30, 2015
Dan McFadden

2. Introduction
This week our team has researched Exxon Mobil’s growth over the years. The paper presents an in-depth analysis of the company’s value discipline, current generic strategies and grand strategies. The team also puts forth strategic choices Exxon should follow to improve the company image, foster growth, increase profits, and boost its market share.

3. Exxon Mobil SWOT Analysis
Strengths
Leading market position and strong R&D capabilities
Weakness
Employee unrest and continued weak performance in the US
Opportunities
Increasing demand for liquefied natural gas (LNG)
Threats
Environmental regulations and risks associated with conducting business outside the country.
The brief summary of Exxon’s SWOT Analysis explains the current situation of the company. Exxon has been one of the top leaders when it comes to oil and fuel supply. The highly effective leadership and robust research abilities are the company’s strengths. The rising demand for LNG is an opportunity Exxon should cash on, because of its easy storage and transporting capabilities.
Recession has been an important cause of concern for a long time. It has resulted in layoffs, causing unrest among employees. The conflict is one of the many weaknesses Exxon has been experiencing in recent times. Another cause of concern for the company is the weak performance of oil and gas supply within US. Exxon has been striving to expand globally, and the major threats faced are Environmental regulations and business risks abroad.

4. The “Best Value Discipline”
Selecting the right value principle when operating a company is crucial, as it is the identity of a company. The three main principles are described below. The most apt principle that suits the company’s culture and ethics is the Best Value Discipline.
Operational Excellence
Product Leadership
Customer Intimacy
Exxon Mobil’s strength lies in its excellent leadership. “Leading market position and strong R&D capabilities” (You Sigma) are the company’s major strengths; thus Operational Excellence would be Exxon’s best value discipline. The company, “employs a business model focused on achieving excellence in the daily operations, generating superior cash flow, and creating long-term shareholder value” (Academia). Exxon Mobil is one of the pioneers of critical water-related technologies applicable to the petroleum industry. The business model defined above enables the company to have a high competitive advantage and successfully maintain its high standards.
Operational excellence is crucial to maximizing long-term shareholder value. Exxon Mobil’s commitment is to increase the long-term value of the investment dollars encumbered by shareholders.

5. The “Best Value Discipline”
Operational Excellence
Operational excellence expects dedicated leadership and a supportive working environment for quality and achievement. A prosperous operational excellence program can enhance business agility, drive innovation, improve public confidence, and help attract and develop world-class talent, and save companies millions in operating costs.
According to ExxonMobil’s 2013 Annual Report, “Operational Excellence begins with exceptional employees.” It all begins when a new employee begins working for the company, and they obtain comprehensive training in best practice methods to guarantee that everyone comprehends the appropriate way to do the right things.
Operational excellence permits Exxon Mobil to express and demonstrate that they are managing their assets reliably, carefully, and cost effectively.

6. Generic Strategy Global Circulation Business Vitality
Competitive Advantage
Global Circulation:
Exxon Mobil (XOM) is a well-established organization combined with superior talent and energy. Exxon delivers, transports, and offers raw petroleum and standard gas all through the world. They circulate their oil items and petrochemicals comprehensively through their base, and their association exhibits their differing qualities of Exxon.
Business Vitality:
The strength of a company incorporates organizations that promote creativity and offer energized products and administrators, for example, extraction, assembling, refining and dissemination of vitality. Theory and business sector control by governments influence the energy market, and, warily put resources into organizations with noteworthy potential. Upward slanting stock diagrams and money related news may demonstrate offering an open door while the inverse implies that stocks are getting underestimated.
Competitive Advantage:
The business is rapidly extending and brings the danger of direct rivalry and expands Exxon Mobil's benefits. Here are few methods that the organization can consider as advantages. There are three nonspecific systems; lower cost, separated, or center. There are two ways an organization initiates an upper hand; one is, lower costs than its rival, or separating itself from costs determined by clients and order at a higher cost.
Based on the best choice, it picks one of the two sorts of extension. It can either be at the center (offering its items to choose portions of the business sector) or, far-reaching, providing its piece crosswise over numerous business sector sections. The bland method mirrors the decisions made with respect to both the sort of a game changer and the degree. The systems include: cost initiative method, separation system, and center procedure.

7. Generic Strategy Cost Leadership Differentiation Focus Strategies
Generic Strategies was created by Michael Porter to help illustrate an organization’s success in strategy rest upon how it positions itself in respect to its environment.
Cost leadership The organization will attempt in turning the least cost makers in an industry and by this it can be alluded to as those taking an expense administration system.
Differentiation  When an organization separates its products from rivals, it is ready to charge a premium cost for its items or administrations in the business. It is extremely relevant in this situation that they will have the capacity to differentiate and leave the company’s unique mark on its products. Create a cutting edge process that is offered only by Exxon Mobil.
Focus strategies
This measurement is not a different methodology for huge organizations because of fluctuating economic situations. Huge organizations like Exxon Mobil, which apply separation methods might likewise decide to use in conjunction with center techniques (either cost or separation). Focusing on the apt strategy is the most appropriate of all methods for little organizations particularly for those needing to evade rivalry with enormous ones. Concentrate on the rebuilding of the affected area.

8. Grand Strategies
Grand strategies provides a master long-term plan with basic direction with major actions for achieving long-term business objectives, also known as a comprehensive approach (Pearce).
Concentrated Growth
Focused resources to dominant market, product and technology, also known as market penetration strategy
Market Development
Organizations market existing products or other uses for existing products, and introduce into new markets.
Product Development
Developing new products through substantial changes to existing products leveraging current market. Strategy includes maximizing, minimizing, substituting, modifying, rearranging, reversing, combining new products.
Innovation
Includes R & D, benefits can include competitive edge. Used with other strategies to avoid high cost and risk as product life cycle is determined by competitors’ replication of innovation and cost of implementation.
Strategies designed to meet Exxon Mobil’s organizational image include highlighting innovative techniques and recent product development to improve its ecological drilling initiatives. After the Valdez oil spill, Exxon has spent time and energy attempting to improve its image posting contact information and developed communication methods which provided transparency. The epidemiological and environmental studies are designed to deliver further information and contribute to risk management planning which is consistent with the Exxon’s guiding principle statements (Exxon).
Future strategies to foster growth, increase profitability and improve stock price include, continued efforts to restore the environment, decrease drilling footprint as newer technology allows multiple drill areas on single pads. Continue to use concentrated growth to expand meeting the faster-growing economies and energy needs. Strategically leverage horizontal and vertical acquisition in growing markets such as China.

9. Grand Strategies Horizontal acquisition Vertical acquisition
Acquiring similar firms eliminates competition and promotes expansion into new markets. Can be strategic geographically; acquiring similar companies in select markets are targeted to increase returns
Vertical acquisition
Acquired company supplies raw materials for the final products of the acquiring company or provides new customers for the company. This strategy can increase the dependability of supply and improve the quality of materials. Enhance a customer base for the supplies and control competitive edge in industries with limited resources.
Concentric Diversification
Strategic acquisition of businesses that think alike in terms of market, technology, or products. Acquired business is independent from the acquiring business, but their synergy decrease weakness and threats
Conglomerate Diversification
Strategy employed by organization seeking to increase financial gain. It is the acquisition of a company based on profitability. Organization seeking to diversify their financial portfolios, increasing financial leverage for future endeavors
Exxon currently utilizes several contracted organizations to meet their growing needs; one strategy for consideration would be to employ concentric diversification. Acquiring similar businesses in the process of obtaining the oil would provide the unique opportunity to leverage the organizations’ employee base to meet Exxon’s needs. The acquisition would also help to utilize the separate entities as revenue when other large organizations contract with them by providing leverage to meet their current needs, and drive revenue from competitors.

10. Grand Strategies Turnaround Divestiture Liquidation
Turnaround strategy is, to convert, change or transform a loss-making company into a profit-making company. Turnaround is a restructuring strategy that tries to reverse the position from loss to profit, from declining sales to increasing sales, from weakness to strength and from instability to stability.
Divestiture
The selling of a firm’s assets, or the disposal of those assets to achieve greater liquidity or to reduce the debt burden of the firm. Selling off the parts of a firm which lose money or do not have a strong return on investment.
Liquidation
The selling off of a firm’s assets, including physical assets, and intellectual assets, from plant to merchandise and from brands to patents. The goal of a liquidation strategy is to recoup as much money of an owners invested money before shuttering the business.
Bankruptcy, Two approaches:
Liquidation, where a firms assets are completely distributed to creditors who usually receive a small fraction of the total owed to them.
Reorganization, which involves the temporary freezing of claims while the company reorganizes and rebuilds it’s operations in a more profitable manner. Reorganization bankruptcy is seen as the more advantageous as it offers the maximum repayment of a firm’s debt if their recovery strategy is successful.
Forecasting that natural gas will overtake coal by 2025 with an increase of approximately 65% by 2040, Exxon projects, an increased opportunity to become a natural gas supplier. This move is expected to create opportunities for global trade with countries in both Europe and the Asia Pacific region. This emerging business is expected to provide consumers with more choices, value, wealth and good jobs. All of this resulted from 25 years of effort after the Exxon-Valdez accident, which was the largest oil spill in U.S. history that leaked approximately 11 million gallons of oil into Prince William Sound, Alaska.

11. Grand Strategies Joint Ventures Strategic Alliances Consortia
A new firm is formed to achieve specific objectives of a partnership , like temporary arrangement, which are advantageous as a risk reducing mechanism in planning new market penetration, and in pooling resources. The problems of equity ownership, operational control, and distribution of profits or losses are unique problems of the arrangement.
Strategic Alliances
A strategic alliance is an agreement of cooperation among two or more independent firms to work together toward common goals. Firms in a strategic alliance do not form a new entity to further their purpose but collaborate while remaining apart and distinct.
Consortia
Consortia is a group made up of two or more individuals or companies that work together toward achieving a chosen objective. Each being responsible for only the obligations set out in the consortium’s contract. Every entity that is under the consortium remains independent in his or her normal business operations and has no say over another member's operations that are not related to the consortium.
Exxon Mobil recognizes the benefits of joint ventures, strategic alliances and consortia. In 2012, their annual report they discussed their progressed strategic cooperation agreement with Rosneft. They also provided highlights of a widely varied portfolio with a broad base of highly competitive resources, assets, products and projects in each of their three areas of focus: Upstream, Downstream and Chemical. Exxon Mobil has operations in 47 countries that produces 87 billion oil-equivalent barrels of worldwide resources; 2.9 billion barrels of new discoveries are from the countries of Australia, Canada, Nigeria, Papua New Guinea, Romania, and Tanzania besides the United States.
Exxon Mobil’s portfolio also includes a network of 32 refineries located throughout the world including 45% in North America, 30% in Europe, and the remainder in Asia Pacific and the Middle East. They occupy three major markets within their activities and utilize countless instances of local cooperation in the discovery, refinement and formulation of their products. Projects that reach across these three business streams are more the norm than the exception as Exxon Mobil seeks to remain the industry leader in the petrochemical arena.

12. Strategy to Improve Image
Actively participate in Social Media Presence through Facebook, Twitter, and YouTube
Use of digital and social media to build engagement in Exxon Mobil’s website
Use of innovation through marketing and adverting campaigns
Offer scholarships, grants, and professional learning
Willing to be vulnerable
Exxon Mobil uses social media to encourage “Be An Engineer” during engineer’s week activities. Exxon Mobil needs to create YouTube videos with accountability and credibility that shows how they will change the way they engage.
Encourage girls to pursue engineering. Exxon Mobil employees lead in hands-on activities while serving as role models during Engineers Week. Various minorities continue to receive scholarships. Exxon Mobil continues to provide grants to support science and technology programs at universities. Exxon Mobil contributed 2.5 million dollars to the University of Wyoming for research into technologies that improve the production of oil and gas. Professional Learning Mickelson ExxonMobil Teachers Academy provides teachers in grades three through five deeper understanding of mathematics and science content in the areas of force and motion, measurement, and data and statistics. The states of New Jersey, Pennsylvania, and Texas offer this academy during the summer for teachers in grades three through five.
Exxon Mobil can show vulnerability by engaging in open and honest conversation. Exxon needs to acknowledge that they might not know all the answers. Listen to what those outside the industry are saying and invite them to industry conferences. Include others in discussions. Listen carefully to their concerns and demonstrate a thoughtful response to their arguments.
Being open to discussion creates a pathway to talk about the benefits people derive from the oil and gas industry. An educated community can weigh the pros and cons in the debate so that everyone can create the best results for the country.

13. Strategies to Foster Growth
High global energy demand
Significant advancements in oil and gas technologies
Projecting America to a Net energy exporter
New Global trade opportunities
High global energy demand:
Exxon Mobil predicts a strong demand for global energy by Use of energy-saving technologies will boost energy requirements, like use of fewer carbon-intensive fuels and the development of unconventional energy sources. (ExxonMobil, 2012).
Oil and Gas Technology Advancements:
Innovation is the key to survival and progress. Exxon is no different, and keeps reinventing itself. The company needs to focus on fusing newer technologies for producing oil that will help elevate the company’s standards to meet the high energy demands globally.
Projecting America to a Net energy exporter:
The Outlook for Energy projects that North America is likely to transition to a net energy exporter by (ExxonMobil, 2012) It is essential that Exxon targets unconventional natural gas supply options as these will form a firm foundation for increased economic growth.
New Global trade opportunities:
All the resources and technologies mentioned above will enable Exxon foster growth opportunities worldwide. The new changes will in turn result in new trade options that will provide customers with more choices and jobs.

14. Strategies to increase Profitability
Upgrade Belgium Refinery
Boost Refinery Performance
Integrated Business Model
Cut Back on Spending
Upgrade Belgium Refinery:
Recession and weak demand for petroleum have forced many refineries within the country to shut down. Exxon plans to implement elevating its oil production by upgrading its Belgium Refinery. “The proposed refinery upgrade would improve Exxon’s downstream margins in the long run by boosting its yield of higher-margin transportation fuels” (Forbes, 2014).
Boost Refinery Performance:
Stepping up its refinery performance has boosted Exxon’s profits by 3% in its third quarter. Profits from the company’s refining operations also showed positive results in Exxon should concentrate on improving its refinery performance, and continually monitor to avoid failures and maintain sustainability in the market.
Integrated Business Model:
"Integration across Upstream, Downstream and Chemical gives us competitive advantages in scale, efficiency, technical and commercial capabilities, regardless of market fluctuations over the business cycle“ (USA Today, 2014). An integrated business model is the backbone of Exxon; hence it should keep up its standards to stay at the top.
Cut Back on Spending
“With the recent decline in oil prices, the company could further cut back it’s spending on some non-profitable upstream projects to conserve cash for shareholder distributions like its peers” (Forbes, 2015).

15. Strategies to Improve Market Share
Increase reserves and production
High demand for oil and gas
Increase in flat earnings
Enhance dividend growth
Increase reserves and production:
Finding advancements in oil and gas production can help Exxon stand apart from its competitors. Recent trends show that the company focuses on innovation, and the prospective projects globally are a proof that the company will have a constant production. “Even if only half of those speculative projects were deemed viable, they would more than adequately replace its current asset base” (Motley Fool, 2014).
High demand for oil and gas:
Demand for oil and gas will never fade out. Even with a rise in alternative technologies, customers will not stop using gasoline for their vehicles. To remain ahead of the competition, Exxon should continuously monitor its refinery operations, promote innovative technologies, and maintain its integrated business model to hold its customer base together.
Increase in flat earnings:
“A company's shares will appreciate in value as its earnings increase. While this is certainly the case with ExxonMobil, the company can also increase the value of its shares in a relatively flat earnings environment. This is because the company generates loads of free cash” (Motley Fool, 2014). The statement means Exxon has excess cash that it can utilize for future projects without depleting funds. Another advantage is, excess cash can help during critical economic conditions; thus it is important that Exxon continues this strategy to keep up its market share.
Enhance dividend growth
ExxonMobil should consider raising its dividend. With oil prices crashing over the past several months, the integrated majors continue to cut back on capital expenditures. ExxonMobil should continue to increase its dividend to keep shareholders happy. Appealing to investors is Exxon's 3.26% dividend yield. That dividend will help boost investor returns until the Exxon Mobil stock price recovers.  Gross margins and efficient use of capital as reasons why it stands out among the big oil companies as a "Buy," especially at current bargain prices. (Nasdaq, 2015).

16. Recommended Strategy Exxon Mobil Analysts Study in Energy Supplies
Global Energy Demand to Increase 30% by 2040
Electricity Demand will make natural gas the fastest growing energy source
Natural gas is expected to meet 60% of energy needs over three decades
Recommendation in an Investment Plan
Five Year Plan
$185 Billion Investment
Develop New Energy Supplies
Domestically and Globally
The strategy recommendation is, to invest approximately $185 billion over the next five years to develop new supplies of energy to meet expected growth in demand (Chairman and CEO Rex W. Tillerson). According to ExxonMobil analysts, the company expects global energy demand to increase by 30 percent by 2040, compared to 2010 levels. Demand for electricity will make natural gas the fastest growing primary energy source. Oil and natural gas are expected to meet 60 percent of energy needs over the next three decades (Chairman and CEO Rex W. Tillerson).

17. References
Crowe, T Reasons ExxonMobil's Stock Could Rise. The Motley Fool. Retrieved from exxonmobils-stock-could-rise.aspx
Exxon Mobil Term Paper. Academia.edu. Retrieved from
Exxon Hydraulic Fracturing Environment and Safety, report to shareholders. Exxon Mobil Corporate. Retrieved from fracturing/environment-and-safety/unconventional-resources- development-risk-management?parentId=0792cb2b-f5b0- 43d5-95a4-49bc4dda2285
Exxon Mobil SWOT Analysis. Yousigma.com. Retrieved from ml

18. References
Exxon Mobil (2015) Guiding Principles. Exxon Mobil Corporate Retrieved from us/guiding-principles/our-guiding- principles?parentId=9d0ed0ac-4f c18- 4ed13f4aff74
Exxon Mobil Operations Integrity Management System. Exxon Mobil Corporate. Retrieved from OIMS_Framework_Brochure.pdf
Exxon Mobil Summary Annual Report Retrieved from Annual%20Report/2013_ExxonMobil_Summary_Annual_ Report.pdf

19. References
Horovitz, B Exxon 3Q profits up on refining boost. USA Today. Retrieved from exxon-mobile-gasoline-refining-earnings-petroleum-gas- prices/ /
Investing, Forbes. Retrieved from plans-to-boost-its-downstream-profitability-with-belgium-refinery- upgrade/
Investing, Forbes. Retrieved from driving-our-96-per-share-price-estimate-for-exxon-mobil/
Koch, W., (2014). Exxon Valdez oil spill, 25 years later, offers lessons. USA TODAY. Retrieved from: valdez-25th-anniversary/ /

20. References
McCreery J. Phillips E. Cigala F. (2013) Operational excellence: The imperative for oil and gas companies. Retrieved from the-imperative-for-oil-and-gas-companies.aspx
Money Morning, Nasdaq. Retrieved from hit-a-fresh-52-week-low-cm453835#/ixzz3VnnH8Jjl
News Releases, ExxonMobil press release. Retrieved from energy-forecasts-shift-global-energy-balance-and-new-opportunities
Pearce, 13th Edition. (n. d.). Strategic Management: Planning for Domestic & Global Competition, McGraw-Hill Create. VitalBook file. Retrieved from