This paper applies four strategic frameworks to ExxonMobil Corporation, one of the world's largest oil and gas companies. The analysis examines the company through the lenses of rational strategic planning and decision-making, disruptive innovation theory, the resource-based view of the firm, and technology leadership as a competitive advantage. Drawing on corporate filings, peer-reviewed literature, and industry sources, the paper evaluates ExxonMobil's global operations, competitive positioning, core competencies, and technological achievements — including record-depth extended-reach drilling. The paper also highlights areas where ExxonMobil's entrenched strategies create vulnerabilities, particularly regarding environmental criticism and global warming discourse.
Everyone seems to talk about it, but few companies actually engage in strategic planning sufficiently well to brag about it. One major company that enjoys serious bragging rights in this regard is Exxon Mobil Corporation, one of the leading players in the global oil and gas industry today. While experts continue to debate the fine points, it is reasonable to suggest that any type of strategy requires a careful assessment of the environment in which a company competes, as well as informed forecasts about what can be expected to occur in the marketplace in the future.
Beyond these commonalities, a wide range of alternatives are available to help corporate leaders in their strategy formulation process, including: (a) strategy as rational thought, strategic planning, and decision-making; (b) strategy as revolution (i.e., "disruptive innovation"); (c) strategy as resource allocation and accumulation in the firm (i.e., the "resource-based view"); and (d) strategy as technology leadership (viewed as a unique competitive advantage). These four strategic approaches are discussed below as they apply to Exxon Mobil Corporation, one of the world's leading producers of oil and gas. A review of the organizational and peer-reviewed literature is followed by a summary of the research and important findings in the conclusion.
Today, Exxon Mobil Corporation (hereinafter "Exxon" or "the company") engages in the exploration, production, transportation, and sale of crude oil and natural gas. The company also engages in the manufacture, transportation, and sale of petroleum products and petrochemicals, and participates in electric power generation (Exxon, 2007). Originally named "Exxon Corporation," Exxon Mobil Corporation was incorporated in the State of New Jersey in 1882. Mobil Corporation became a wholly-owned subsidiary of Exxon Corporation on November 30, 1999, and the combined entity changed its name to Exxon Mobil Corporation (Exxon Form 10-K, 2006).
The various business divisions and affiliated companies of ExxonMobil operate or market products in the United States as well as most other countries of the world. The company's primary business is energy, including the exploration and production of crude oil and natural gas, manufacture of petroleum products, and the transportation and sale of crude oil, natural gas, and petroleum products (Exxon Form 10-K, 2006). The company is also a major manufacturer and marketer of commodity petrochemicals — including olefins, aromatics, polyethylene, and polypropylene plastics — as well as a wide range of specialty products (Exxon Form 10-K, 2006). In addition, the company maintains interests in electric power generation facilities, and affiliates of ExxonMobil conduct extensive research programs in support of these businesses (Exxon Form 10-K, 2006). The company also holds a license to explore gas in the Gorgon liquefied natural gas project for domestic supply.
Today, Exxon operates in the United States, Canada, Europe, Africa, Asia-Pacific, the Middle East, the Russia/Caspian region, and South America (Exxon, 2007). The company is headquartered in Irving, Texas, and has numerous business divisions and hundreds of affiliates, many of which also carry names that include ExxonMobil, Exxon, Esso, or Mobil (Exxon Form 10-K, 2006). A comparison of Exxon's stock performance with that of two of its top competitors, British Petroleum and Chevron, over the past five years illustrates the company's strong competitive position in the marketplace (Yahoo! Finance, 2007).
Strategic planning, like any type of planning, involves establishing goals and identifying quantifiable objectives that can help an organization reach them. What perhaps best differentiates strategic planning from intuitive or "seat-of-the-pants" planning concerns how well-informed decision-makers are about the environment in which the company competes. In some cases, strategic alliances may represent the best course of action, while acquiring competitors also represents a viable alternative in many cases. Because every organization is unique, there cannot be a one-size-fits-all strategic approach, but there are general guidelines that can help companies recognize when one alternative is superior to another.
Generally speaking, the reasons for mergers and acquisitions include: achieving competitive advantages through market power; overcoming barriers to entry; increasing the speed of market entry; managing the significant costs involved in developing new products; avoiding the risk of new product development; achieving diversification; and avoiding competition (Culpan, 2002).
While small and medium-sized firms that already enjoy product and market niches continue to compete in their respective domestic and global markets, these smaller enterprises will likely experience difficult periods when competing with enormous concerns such as Exxon. In this regard, Culpan emphasizes that "under the pressure of global competition, the next decade will more likely see the continuation of mergers and acquisitions across nations in a variety of industries" (Culpan, 2002, p. 45). The impact of increasing consolidations in the marketplace does not mean there will be no opportunities for growth for SMEs; however, it does suggest that giant companies such as Exxon will make it exceedingly difficult for smaller companies to compete in the global marketplace unless those companies already enjoy product and market niches or have strategic alliances with those that do (Culpan, 2002).
According to Culpan, "This situation has been true for years; however, there would be more pressure on medium and small-size companies, even threatening their existence. The incredible expansion of giant retailer Wal-Mart and the mergers of Exxon and Mobil, British Petroleum and Amoco, and Mercedes-Benz and DaimlerChrysler are examples of the results of such rational decision-making processes in action" (Culpan, 2002, p. 45). While the company may excel in some ways through its strategic practice, it remains weaker in others, as discussed further below.
"Applying Christensen's five disruptive innovation principles to Exxon"
"Core competencies and resource-based competitive advantage"
"Extended-reach drilling and technology-driven competitive advantage"
The research showed that a company's performance and operations can be viewed from a number of perspectives, with four useful ones being: (a) strategy as rational thought, strategic planning, and decision-making; (b) strategy as revolution (disruptive innovation); (c) strategy as resource allocation and accumulation in the firm (the resource-based view); and (d) strategy as technology leadership viewed as a unique competitive advantage. The research also showed that when these four perspectives are applied to large concerns such as Exxon Mobil Corporation, they can help identify the rationale for some of the company's actions in recent years and help predict what courses of action the company will likely take in the future.
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