The natural resources like oil and gas are of great importance for any country, as the drive the plants, heating and so on. This market though important is very tricky and it take much effort and resource not only to enter it, but to stay. Exxon Mobil is one of the biggest international corporation in a gas and oil fields. To ensure stability, promote growth and avoid potential dangers it is essential for any companies to be prepared, thus different analysis like SWOT, PEST and STEEP are performed, to evaluate the current situation in the company and on the market.
The political situation is rather unstable and there are so many dangers, so the influence of an environment becomes more pronounced and essential, that is why it is important to use STEEP analysis instead of more common SWOT, to ensure that all most valuable factors are discussed.
Company Profile
Exxon Mobil Corporation (ExxonMobil) is more than 125 year old, through which it has evolved from a regional company into the one of the biggest integrated oil and gas company on the World. It is engaged in all fields from upstream to petroleum products and operates in most countries under Exxon, Esso and Mobil brands.
Their innovation policy, research programs, outstanding technical expertise enables to bring new products on the market and to stimulate transportation and production of numerous customer goods. People there are the professional who have high-quality opportunities. All this make ExxonMobil so competitive whenever it goes.
It manufactures both the commodity petrochemicals including plastics and chemicals of special applications.
Financial performance
According to the GlobalData report published in 2015 the company performance in 2010-2014 was first experiencing a rise followed by downfall. This is clearly an indication of processes that a partially explained by the Global Economic Crisis and the Great Recession. Though the product line is broad still the consumption is decreasing The change in 2012 was not just a temporary success, though the company leaders declared to hold it, the political situation and low oi prices were playing against them. Still the company could be considered to be in the more or less stable position.
The drop in earnings is attributed to low crude prices so 2015 and 2006 would not be better. The company debts are also high, so some investors consider
In June 2015 Tchekhov (2015) has performed analysis of ExxonMobithe balance sheets to see what was happening with this company within las seven years and how it answers the Great Recession challenge.
The corporate web-page showed total growth in balance sheets of 45% from about $242 billion in 2007 to about $353 billion at the end of third quarter 2014. This value is in line when compared to the data provided by competitors. For example about the Chevron balance sheet is about $265 billion, about $310 billion possessed by Royal Dutch Shell and about $360 billion for BP Plc. The company is among the key players and
Attention should be paid to a sharp drop in its cash due to standing pat on its dividends and return of shares and a jump in its assets resulting fight back a of seminal, albeit ill-timed, acquisition of it Energy in 2010. In 2015To fight this the company has tried to raise money through the investment.
Also ExxonMobil liabilities deserve a comment, as the represent relatively steady long-term debt and payables.It is clear that an earnings-fueled expansion is a prime result of the former, while the latter is a clear sign of a superior working capital management. The total equity balance has grown, it rise is about $61 billion.
The analysis of ExxonMobil working capital shows its management over the years paying special atention the resulting short-term assets and liabilities management.
Inventories have been rising, my be not dramatically, but still it is risky in the current market situations, as low prices attributes to lower inventory turnover , what is definitely a bad sign and the indication of loss in efficiency. The time needed to get invention working has also increased, so that means that inventories are becoming expensive dependents with low potential. Here situations is not going to be better soon. Perfect customer payments management like light in darkness helped to decrease the account receivables turnover, what is good taking into account the situation with inventories
The overall situation is not bad, but the company seems to start losing grip on its advantages in its working capital management mainly due to the hug inventory balloon of about $18 billion. This number is third t BP and Total SA. For the current economic situation here is nothing to be proud of, but still ExxonMobil is a good position for standing up.
SWOT analysis
Though SWOT analysis was regarded as an incomplete for the company evaluation especially in the light of current economical situation , still it is possible to use it as a start for the later assessment of an effect of differen environmental factors like sociocultural, technological, economic, ecological, political/Legal and so on.
The presented table present the results of the two researches done in 2012 and 2015 by either professional or a student’s group :
Taking the literature data into account and changes on the market a SWOT-table was filled in the following way. Though, some analytics see Chine as an opportunity, here it is referred as a threat due to the controversial prediction concerning its economical development and potential decrease in raw materials consumption
The SWOT-analysis showed that company has lost several of its Strengths through last three years, though gained potential threats, what makes its operation even harder/
All this factors will be closely examined in next paragraphs and assessed in the short- and long-term perspective. This does not mean that other factors, like demographics, are negligible, but their effect is considered to week compared to the one for any of the listed factors.
Political factor
The tensed political situation in Syria, on the Mendel East is well acknowledged. The radical organization are putting the threat to everything form democracy, to gas pipes.
ExxonMobile operates in more than 50 countries, so the danger from political instability is more that high. Another point is the coalitions of different oil manufacturers, the crude oil prices goes up and down because of the political actions and the decisions.
Now Libya is about to start oil export and it is unclear how and when it would effect the market. Arabians also seem to have something unexpected in their minds as the price now considered to be so much close to the cost or to be even bellow it.
The prices goes down, but still the costs for end products and the production itself does not follow it with the same speed. This gap is hard to describe, but it alerts that any moment some drastic change can happen.
So the management in Exxon Mobile should be prepared to take actions if needed. As previously, the response and the adaptation were not among the strengths of the corporation it should be paid attention and controlled.
Economical Factor
The financial situation for the company is complicated and controversial. The Global Economic Crisis has goon to far, so the market is suffering and there are no indications that the nearest future would be much better, though some good signs has been observed. To minimize loss, ExxonMobile should work on the improvement of financial flows and operations including the better resources planning, more effective the marketing campaigns including adoption of the newest ideas to attract the potential customers and expansion on new markets and may be fields of interest.
The innovation and development process should not be stopped, but every step must be examined and considered as for the potential benefit and timing. May be for some time the priority could be given to a smaller project or the ones requiring les resources.
It should be concluded that the in such hard time any financial failure or misfortune should be avoided through the risk management.
The situation on the development markets and China should be also considered as a potential risk, as the signals coming from this area are shaking and there is now real understanding what it will be in the next half a year, as the economies are stressed, and the political issues are still playing their first roles.
Legal factors
Modern society and states are oriented on prevention of any threat to its wellbeing. The ExxonMobil's Policies Relating to Legal & Political Issues stays that all employees are to act according to the national laws and do not violate it or gave orders to do so. Still legal issues occure.
Fifteen years ago Indonesians have filed suit in Us federal court. (ExxonMobile, 2015) They accused Exxon Mobil of human rights abuses committed by Indonesian security forces in the province of Aceh. According to eleven villages the company has hired Indonesian militaries to protect their natural gas extraction facility and a pipeline and knew about human rights violations done bz this people in Aceh including murder, tortures and assaults at the hands. On October 14, 2005, the plaintiffs’ case was ruled to District of Columbia (DC) state law, though the plaintiffs were denied of federal claims under the Alien Tort Claims Act and the Torture Victim Protection Act. Despite ExxonMobil attempts to file a dismiss (2006) and appeals (2007) the case has proceeded. In 2008 the US Supreme declined to hear this case and in the US District Court for the District of Columbia the judge declined to grant the defendants’ motion, so the case was to be submitted to a jury for trial. However, the motion to dismiss from the defendants filled on 30 September 2009 was granted based on the findings that the plaintiffs did not have standing to bring the case in a US court. In 2011 this dismissal was reversed, a corporation finding was found to be not immune from liability under the Alien Tort Claims Act. Despite filed motion on September 2014, a US federal court held that Indonesian villagers from the Aceh province can proceed with their claims against ExxonMobil. In July 2015 the US federal court decided that the plaintiffs' may proceed in US court.
It is clear that case will be on and on in surfaces until final decision, but it takes resources and makes the company looks bad in the eyes of potential investors. The effect is hard to calculate and will fully understood only after the case find it end.
The company has also been at least once accused of violation of gas emission laws filed in 2010 in Taxis. (ExxonMobil, 2010). This violation is important as the global pursuit for the green industries has become not only a trend, but a real thing. The laws are getting strict and the punishment here is also associated not only with monetary loss but brand damage.
The current situation in athletics, showed how even indirect negative issues can ruin image, as Adidas and Nestle have both declared that the doping cases have damaged thir image as sponsors. People do not want to associate themselves with a brand supporting black schemas. Noone can be sure what it would be if the Adidas would be accused of knowing about the violations of the fair paly rules, but it would definitely have a much higher negative impact.
The problem is that the brand is something stable and its value downfall is hard to imrove within a short term perspective if a major damage occurs.
Technical and environmental factor
The new method technologies are to bring us to the resources hidden under water and to provide us with possibility to explore new areas. But this technologies can lead to an environmental damages, due to the changes in ecosystems. The ExxonMobil corporate page declares its committment “to positive action on climate change” and “dedication to reducing the risk of climate change in the most efficient way for society”. Such claims are not that easy to be fulfilled, and the lawsuits mentioned above are the clear indicating, that ExxonMobil may be have tried to follow the rules, but sometimes eventually have broken it.
Last years showed so many problems with oil, chemical and another facilities, even for a big corporations like BP, so it is understandable that ExxonMobil take this very serious and has reduced the gas emission by 42%, but here is the thing. The new regulations for new types of danger can be published only after these progressive things are not only presented as prototypes, but work on a everyday basis. Thus, the technology could in a moment become partially or fully illegal and here the risk is hard to estimate using common procedures.
As within the next decades the potential growth in field of interest for Exxon Mobil is high, the environmental factor should be balanced not only on paper.
Conclusion
Despite economic crisis ExxonMobil has all opportunities to grow and profit, still is needs to fight the internal problems, problem with adaptation to a new conditions and rather big amount of fines, though manages the innovation and development. ExxonMobil is innovative, but should be improving its efficiency and speeding up the reaction to the market changes.
The environmental laws are updated and are becoming strict, so in the light of lawsuits concerning violations of gas emission the corporation has much to do.
Still proceeding lawsuits can in the end only cost it money, but also damage the reputation. The later possible outcome is more dangerous as more and more people pay attention not only to the brand, innovation and benefits, but the actions of the manufacturer.
If it turns true that the Indonesian villagers were suffering and Exxon Mobile knew that, but have not acted, this could prevent them from all developing markets. The human right abuse is now a very important question and as the USA presents itself as guarantor of this right it could also effect the national market.
References
Regan Rajan (2013), Strategic Analysis of Shell Corporation. Web. 10 February Retrieved from http://reganrajan.com.
Global Data (2015), ExxonMobil Corporation - Financial and Strategic Analysis Review, Reference Code: GDGE1203FSA. Web. 10 February Retrieved from http://callisto.ggsrv.com.
ExxonMobil (2014), Financial and operating information, Web. 10 February Retrieved from http://www.exxonmobil.com.
http://www.exxonmobil.com/Corporate/about_what_downstream.aspx
http://www.exxonmobil.com/Corporate/about_us.aspx
ExxonMobil lawsuit (re Aceh) (2015) Author: Business & Human Rights Resource Centre, Web. 10 February 2016.Retrieved from
http://business-humanrights.org/en/exxonmobil-lawsuit-re-aceh
ExxonMobile XOM 10-K (2010) Web. 10 February 2016. Retrieved from http://www.wikinvest.com/stock/Exxon_Mobil_%28XOM%29/Legal%20Proceedings
An essential analysis of ExxonMobil’s balance sheet
