1. Strategic Choice and Evaluation Exxon Mobil
Brenda Catron, Ashley May, Darrelle Pan, Elizabeth Patz, Bobbi Ready, Diana Velez & Hridya Warrier
STR/581
April 6, 2015
Dan McFadden
Introduction
Exxon has been the top leading company 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.

2. Plan Execution Details: Tasks, Milestones & Resources
Exxon Mobil is well known for its excellent leadership.
The leading market position and strong R&D capabilities (You Sigma) are the company’s major milestones.
Tasks
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.
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.

3. Plan Execution Details: Work Breakdown Structure
Energy Supply Development Investment Plan
Design
Domestic Development
Global Development
Special Support
Consultation
Build
Construction Management
Installation
Fabrication
Implementation
Operate
Manager
Operate Facilities
Maintain Facilities
Assessment
Evaluate
Audit
Environmental Assessment
The work breakdown structure for ExxonMobil is to chart important work elements, projects, tasks, which illustrate to portray the relationships with each other and to the other project as a whole. The strategy 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 investment plan will begin with the following stages: Design, Build, Implement and Assess.

4. Plan Execution Details: Work Breakdown Structure
The Work Breakdown Structure (WBS), enables companies to divide the managerial responsibilities into different functional sections. WBS is a graphical representation of the jobs that each department will handle. A WBS is constructed before the project commences. The graphical representation defines the task, task leader, duration of a project, the start and end date for a task, and the project manager who will precede the project. Large and complex projects can be broken down into small tasks, making it easy for anyone to follow; thus preventing delays in projects.

5. Plan Execution Details: Work Breakdown Structure

6. Plan Execution Details: Work Breakdown Structure

7. Plan Execution Details: Risk Analysis and Matrix
Develop new and advanced energy supplies, global expansion and have a strong investment plan of $185 billion were the primary strategies our team chalked out in last week’s paper. Every plan has its set of pros and cons involved. This section discusses the risks involved in a strategic plan and presents a matrix to handle risks efficiently.
Cost and Integration
Arctic Oil Drilling
Investment Losses
Cost and Integration:
Innovation is an integral part of every business today, because of the highly competitive environment. Oil Industry is no different. Alternative resources are being created to save fuel, and innovative methods have been developed to boost oil sales. The major risk involved here is the cost and integration hassles. “Even a small, new widget will be a part of a much bigger system, and often system integration issues make the oil and gas operator reluctant to adopt it” (Proactive Investors, 2013). The brighter side is its long-term benefits. Successful companies like Exxon see this as an ROI strategy; hence they are willing to take this risk.
Arctic Oil Drilling:
Companies are exploring outside its domestic boundaries to expand their businesses, owing to enormous losses they have faced here. The most recent interview with Rex Tillerson, CEO of Exxon, highlights the reasons for venturing into Arctic oil drills, the risks, and lessons. Arctic is an unexplored, yet environmentally fragile places. Rex Tillerson believes, the rising demand for oil will eventually lead many companies to tread unknown territories. It is a good time to start, as resources will decline with growing world economies. If they start now, it will take 20 – 40 years for other resources to come on.
A major risk is, understanding the ocean conditions in the Arctic, an example he mentioned, “the pipelines that run from those (Arctic) facilities to the shore have to be buried at a sufficient depth below the seabed, so ice gouging doesn't damage them” (Macon, 2015). Exxon will need a vast and talented group of researchers to gather adequate data for the region. Another risk Exxon will need to overcome is, convincing the vast US population to believe in the expansion option. The company will have to focus on, to get the right regulatory and fiscal regime in place will allow the company stay focused and develop newer policies for a futuristic economic growth.
Investment Losses:
Exxon proposes a massive investment of $185 billion in five years. The investment is seen as a growing opportunity for the company, but many see huge losses. “Nigeria risks losing $185 billion within 10 years as higher taxes proposed by a new law will deter investment in the country’s oil industry, an association of energy companies including Exxon Mobil Corp. said” (Bloomberg). The new law proposes increasing taxes, and lower allowances, resulting many companies to stay away from investing in the country. Exxon is confident with its proposed investment opportunities and plans to go as decided. The company would need tremendous support from its management. The integrated business model will be put to the test during this huge investment bargain.

8. Plan Execution Details: Risk Analysis and Matrix
There are three significant risks our team has identified for Exxon’s futuristic strategies. The above chart displays a simple risk assessment matrix for our analysis. There are three main parts when constructing a risk analysis matrix; Impact, Probability and Significance. “The probability times the impact is the risk score. It can be referred to as severity, consequence, significance, or just risk score” (MaxMetrics.com).
The risk score enables company decide if the risk taken promotes company’s growth. The higher risk score also helps the management channelize the company funds in the right direction. The company can invest its maximum time and best resources on the risk showing the highest significance.
Cost & Integration
Companies invest in innovative technologies to improve the standards of energy production. The investment will have a significant impact on company funds; hence the value is highest, 5. The probability of investing in the new technology is on the lower end; hence the value, 2. The risk score is 10.
Arctic Oil Drilling
Oil drilling in Arctic is a new proposal by the company’s CEO. The impact is within limits and can be controlled; thus the value is 3. The probability of taking this risk is minor; thus the value is 2. The risk score here is 6.
Investment Losses
Exxon proposes to invest a huge amount, $185 billion over the next five years. The impact for the company is very high, as it can suffer losses; hence the value is 5. The probability would be, a continuous investment; thus the value is 3. The risk score shows 15, which is the highest compared to all other options. The company should treat this risk as its top most priority.

9. Plan Execution Details: Risk Mitigation Strategies & Contingency Plans
Risk mitigation strategies assess:
Potential detriments, risks, or threats
Exxon Mobil mitigates risk using extensive risk management and contingency planning.
Method of managing risks include:
Understanding of risk into design, construction, and operation of exposed facilities
Responding rapidly and effectively with early and coordinated action
Protecting the safety of employees and operations with business continuity and emergency response plans
Practicing coordination and logistical response using what could be the worst scenario emergency response exercises
Risk mitigation strategies are action plans made following a detailed assessment of the potential detriments, risks, or threats that can impact a business operation, a project or enterprise. The objective of risk mitigation strategies is to minimize or remove the detrimental effects of the recognized risks essential to a distinct venture, even before any disaster or damage takes place.
Exxon Mobil mitigates risk with the utilization of an extensive risk management system and relevant contingency planning. Exxon Mobil mitigates the known risks by dividing them into facility and equipment design, construction, and operations. Business continuity planning along with emergency preparedness are the two crucial components to manage risks of business interruption. These two factors are essential to the world’s economy because they help Exxon Mobil by providing fuels for electrical power, transportation and chemicals for consumer products.
Exxon Mobil’s method of managing these risks includes the following factors the four areas listed above.
ExxonMobil manages risk through competent and dedicated employees that have explicit responsibility. They have well-developed and distinctly established high standards of design, policies, procedures, employee, and contractor training, strenuously applied management systems, and an orderly method of evaluating performance that drives continuous improvement.

10. Plan Execution Details: Risk Mitigation Strategies & Contingency Plans
Contingency planning prepares for events:
Loss of customers, data, people, suppliers and disruptive unknowns
Exxon Mobil uses contingency plans for:
Oil Spills
Natural degradation of oil improved through dispersants
Emergency response and preparedness
Tropical weather preparedness
Contingency planning
It is not just about primary disasters, but also about preparing for events such as the loss of customers, people, data, and suppliers, and other disruptive unknowns. That is why it is important to make contingency planning a regular part of the way a business works. The contingency planning efforts cover a range of different emergency types of natural disasters, conflicts, technological, and political. The contingency plan is also for new crisis and potential changes in ongoing protracted operations.
ExxonMobil’s operations consist of activities in a mixture of environments. The effects of dangerous weather can interrupt operations or equipment. The present scientific understanding of climate change produces little guidance on how the risks of weather extremes may change in the future. Therefore, Exxon Mobil manages risks through vigorous design and operations contingency planning. It also provides limited guidance on how trends in storms and weather extremes will change in the future over a very long time horizon. They presently construct, devise, and operate facilities to resist an assortment of intense weather conditions, including much of the range of possible outcomes.
Oil Spills
Marine well containment system provides well technology and containment equipment in the Gulf of Mexico.
The natural degradation of oil improved through dispersants
All marine environments consist of naturally occurring microbes that break down and feed on crude oil, which means that crude oil is mostly biodegradable.
Emergency response and preparedness
It is crucial for a business to have the ability to respond to emergencies as soon as they arise. ExxonMobil conducts drills and extensive training in preparation for such situations.
Tropical weather preparedness
Exxon Mobil closely monitors storm activity.

11. Plan Execution Details: Change Management Considerations
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.

12. Plan Execution Details: Change Management Considerations
The change management refers to a structured process which has been placed for temporary or permanent changed.
Vision Statement
Training of new methods
Enforce Structure
Change management is a structured approach to ensure that the recommended changes are smoothly and accurately implemented. In addition, it also makes sure that the benefits of the recommended changed are achieved.
Vision Statement
One time of change management is communication, and it tells who is affected by the changed. A vision statement is the most well-known way to inform people of the direction in which the company is about to take. With Exxon updating the vision statement, they are informing the consumers and employees where the company will be in the future and what steps they are taking to get to their goal place. The vision statement will show how they are focused on the environment for the people and the prevention of another environment hazard.
Training of new methods
The training of new methods is a form of implement changed. In change projects, it is always important to make sure everyone is trained in the skills necessary to carry out what is required of them. For Exxon, they need highly qualified engineers and analyst in order to create highly new innovated ways to improve the environment and create a competitive edge for the company.

13. Strategic Plan Justifications: Key Success Factors
Global Circulation – Increase growth through improving dealer/distributor profitability, increased share of the segment in key markets. Maintaining and promoting strong image brand.
Business Vitality – Profitable growth, active management strategies to lower manufacturing costs. Profitability index, the total cost per gallon vs. competitors total cost, yield index, employee engagement surveys.
Competitive Advantage – Cost and integration, using innovative technology to decrease cost, and create a competitive edge. Artic Drilling is an example of potential strategic advantage. Return on investment conducted for innovative technology. Increased marketing strategy to engage consumers and public opinion.
Key success factors provide evaluation indicating the progress against the goal, providing metrics or measurement. Measures used to determine the effectiveness of increased growth through global circulation includes an increased share of the segment in key markets, growth indicators and maintaining a strong brand image. As an example of a strategic success by Exxon was the merger between Exxon and Mobil resulting in tremendous savings and growth to the organization 27% increased revenue during the first year following the merger (Exxon Mobil). Considering the growth in global markets to include opportunities for vertical acquisitions. Innovative technology such as Controlled Freeze Zone (CFZ) and strategic future sites such as Artic Drilling demonstrates long-term growth with a high ROI. Maintaining a strong competitive advantage staying ahead in the market. Metrics includes showing an improved profitability index, remaining competitive maintaining lower total cost per gallon versus competitors total cost, yield index, and employee engagement surveys (Pearce).
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.

14. Strategic Plan Justifications: Plan Budget
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. Strategic Plan Justifications: Plan Budget
Every business should have the right funds in place before a project commences. Budgeting and forecasting enable organizations assess the total cost that will be needed to complete a project within the given time frame. Planning summarizes a company’s expectations for coming years. Budget defines how the plan will be executed, and determines expenditures for a given period. A plan budget is the complete framework that will help managers determine the company’s financial goals.

16. Strategic Plan Justifications:5 Year Forecasted P&L/Income Statement
Increased Investments & Acquisitions
Exxon has been going strong over the years. We have presented a Profit & Loss Statement that displays a five-year forecasted growth for the company. The period from 2012 – 2014 have been a turning point for the company. At one hand, Exxon has gained substantial revenues with a consistent increase in its oil reserves for the period, On the other hand, Exxon has seen a fall in profits because of increased operating expenses in The last quarter of 2013 has seen a significant investment proposition that turned fruitful for the company in the following year. It gained maximum revenue in 2014.
The Statement highlights all the critical decisions that have affected the business positively and negatively. The rise in oil reserves by 1.1 million and 3.3 million in 2013 and 2014 show a massive increase in net sales. When comparing the operating expenses for 2012 – 2014, there is a considerable rise, causing a slump in revenue for the year Total operating costs were $152,015 as compared to 2012, which caused a downward trend in profits by approximately 27%.
In the same year, 2013, Exxon made a major investment move by acquiring Canada’s Celtic Exploration for about $2.5 billion (Vault.com). The company has invested millions in different refineries in the same year, about $2 million as highlighted (2,045,000). These two significant moves by the company have resulted in generating substantial revenues in Revenues have increased to $7,123,663, almost a $4.5 million jump.

17. Strategic Plan Justifications:5 Year Forecasted P&L/Income Statement
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 high demand for global energy by Use of energy-saving technologies will boost energy requirements, like the 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.

18. Strategic Plan Justifications: Financial/Business Assumptions
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 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
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.
In conclusion 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).

19. References
Bala-Gbogbo, E and Ibukun, Y. August Bloomberg. Retrieved from risks-185-billion-loss-from-new-law-oil-companies-say
Crowe, T. (2014) Reasons ExxonMobil's Stock Could Rise. The Motley Fool. Retrieved from exxonmobils-stock-could-rise.aspx
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

20. References
Exxon Mobil Term Paper. Academia.edu. Retrieved from
Exxon Mobil SWOT Analysis. Yousigma.com. Retrieved from
Exxon Mobil Business Success Strategies (2014). Retrieved from strategies/exxon-mobil-business-success-strategies/431.html
Fahey, J, April Exxon CEO talks Arctic oil drilling, risks, lessons. Macon. Retrieved from arctic-oil-drilling.html
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

21. References
Money Morning, Nasdaq. Retrieved from price-hit-a-fresh-52-week-low-cm453835#/ixzz3VnnH8Jjl
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Warren, Angus, June Why companies avoid new oil and gas technology. Proactive Investors UK. Retrieved from view/13333/why-companies-avoid-new-oil-and-gas-technology html