Background information
Exxon Mobil Corporation is a multinational, which has contributed a considerable share in the oil and gas industry. Forbes Magazine (2007) ranked Exxon Mobil Corporation the lending company in terms of revenue and market capitalization (Christine 56). Following its outstanding performance in oil and gas industry, the company has managed to establish twenty-two refineries in more than forty states worldwide thus ranking it the largest refiner. This position is anticipated to change the future of the company in terms of production.
Goldman Sachs Group Incorporation is an American-based investment bank rendering financial and investment services worldwide. The bank offer investment and management services such as; brokerage, acquisition, and merger advice, mortgage services, market creation, and private equity deals. The bank is one of the key players in United States Stock and Exchange Security Market, contributing more than fifty percent of the stoke shares. Since its inception in 1869, Goldman Sachs Group has been ranked one of the premier banks. Although the reputation of Goldman Sachs Group Bank has decreased steadily since 2006, the company’s future is likely to be better.
Discussion
Companies operate in an unpredictable environment characterized with spontaneous fluctuation of price of goods and services, trade regulations, and change of consumer behavior. Despite these adversities, Goldman Sachs Group and Exxon Mobil Corporation are two companies that have managed to compete fairly with their arch rivalries and emerge the leading companies in the world. However, the question that needs to be addressed is how these companies will cope with emerging challenges that may affect their survival and performance in the near future.
For many years, Exxon Mobil Corporation and Goldman Sachs Group Incorporation have strived to increase their profit margins and compete effectively in the international arena. Both companies have achieved this goal by conducting an internal analysis on their operating ratios. Exxon Mobil Corporation has maintained a steady value of 6.7% on return assets and 15.7% on return equity ratio. On the other hand, Goldman Sachs has maintained 5.8 % on return assets and 14.3% on equity ratio (Feet 78). This indicates that these companies are effective in maintaining their assets share in banking and oil and gas industry respectively. Following this results, one would say that, the future of the two companies is bright and that they are likely to triple their profit and market capitalization within the coming decade.
Through the investment management program, Exxon Mobil Corporation has expanded its shareholders equity by investing in other sectors such as real estates, stock and security exchange, and other financial services. Money generated through this program enables the company explore other investment opportunities and reduce its debt ratio. In 2010, the company recorded an increase of $42million as the profit compared to $34 million in 2009. This was possible because the company maintained a gross profit margin of 8.2% coupled with a margin profit of 6.3%. However, the company should ensure that its gross profit operating margin, remains relatively higher than 5.2% because it will affect future investment. Most companies fail to generate adequate capital for future investment when they enjoy operating margin of less than 5.0%. It is imperative that both companies assess this aspect so they can remain relevant and competent in the near future.
Energy industry and banking sector offer a lucrative business opportunity to Exxon Mobil and Goldman Sachs Group respectively. These sectors are growing and expanding at an alarming rate because of globalization, improved infrastructure, technological advancement, and political stability. In order for the two companies to improve their performance in the future, firstly, Exxon Mobil Corporation should improve their capital and shareholders’ equity in order to maintain high-level performance according to the stock and security exchange records. This way, the two companies, have an opportunity of controlling and capturing a larger market than its rivals do, in 50 years to come. This move will also cushion the company from incurring massive losses when oil and gas price decrease globally. For instance, in 2005, Exxon stoke price rose by 25% while oil and gas prices decreased by 10%. Increase in stoke and securities Exchange helped the company lower its debt ratio and maintains its capital share. In this regard, the company is likely to reduce its cost of operation; thereby make high profits in 10 or more years.
In a similar vein, Goldman Sachs should utilize this fact to extrapolate its market space by investment banking, security services and assets management. In the last few years, the number of multinational companies has doubled thus providing the banking sector will a lucrative business opportunity. This implies that more people from the informal and formal sectors would be seeking financial and investment services. Goldman Sachs Group should expand its market niche by offering financial services that meet needs of the clients. This way, the firm will enable to compete effectively with other agents in the financial sector; hence, remain relevant in the end.
Exxon Mobil and Goldman Sachs should integrate technology in their production process. This is the most effective way of ensuring that both companies remain relevant, survive and competent effectively. Technology is dynamic, and companies that cope with technological challenges compete effectively. Oil and gas companies contribute in environmental pollution by emitting harmful gases that lead to global warming and climate change. Oil and gas companies should use environmental friendly technologies and energy sources so that to reduce pollution. Additionally, oil and gas reserves are being depleted at an alarming rate thus posing a challenge to the future generations. Exxon Mobil should use floating Liquefied Natural Gas (FLNG) technology to exploit and preserve its reserve deposits. This technology will help Exxon Mobil Corporation tap offshore gas economically and conserve the environment such that, in the future, the company will improve its production process.
On the other hand, Goldman Sachs Group should introduce technology in its operation so that to improve the quality of services and enhance efficiency (Lisa 90). The bank should introduce mobile-banking services, e- banking and other application services so that to maintain its clients and attract others. Both companies need to implement an effective management system aimed at promoting sustainability, prosperity, and development. The management should hire competent, proactive and result-oriented employees so that to improve service delivery. Adopting these initiatives will improve the performance of the companies, in such a way that they will improve the efficiency of their operations and avoid legal battles regarding pollution. Notably, there is a possibility of Exxon Mobil Corporation and Goldman Sachs Group to become world-leading companies in the next fifty years.
Conclusion
Exxon Mobil Corporation is a multinational company that deals with oil and gas products. Goldman Sachs Group is an international institution providing, financial, investment and assets management services. In order for these companies to survive and thrive in the future, both companies need to analysis their operating ratios, improve management systems and integrate technology in the production process. This move will help these companies establish their branches in almost of countries globally. Additionally, they stand a chance of tripling their profits and market shares in 10 years to come in an event that they apply strategic management.
Works cited
Christine, Harper. Private Empire: ExxonMobil and American Power. London: Palgrave Macmillan, 2005. Print.
Feet, wet. The Goldman Sachs Group. San Francisco. Canada: WetFee, 2004. Print.
Lisa, Edilich. Goldman Sachs: The Culture Of Success. New York: McGrew Publishers, 1999. Print.
