Free Report About Exxon Mobil Executive Memo Report

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Company Overview: Since its merger in 1999, Exxon Mobil has gone on to become the 5th largest revenue producing company in the oil and gas industry. Its product lines consist of 1) fuels such as gas, diesel etc for automobiles, domestic fuel towards heating of houses as well as heavy oil and gas oil for industrial/power purposes, 2) Lubricant products for a variety of consumer and industrial applications, 3) Petrochemical products which are designed to cater to a number of chemical based products in the realm of plastics, rubber etc.
Management: Energy companies like Exxon Mobil are dependent on their portfolio of resource sites i.e extraction points. Exxon Mobil invests hundreds of Millions of dollars on exploring new international territories, an example of this would be partnering with Statoil in Tanzania to develop offshore fields which have over $20 trillion cubic tones of natural gas. Another major goal of Exxon Mobil management is to streamline and extract maximum efficiency from its investments as seen in the Singapore chemical expansion project. As per the Annual report it is also clear that large sums are spent on human resource development as well as research and development which they feel is at the crux of their long term growth.
Marketing: In terms of the downstream activities and as stated in the previous memo Exxon mobile has predominantly focused on promotion. An example of this is communicating how Exxon Mobil helps heat millions of homes and businesses with their domestic fuel business. It has positioned itself as an energy company rather than a company that sells gas. Other forms of promotion can be seen at with their branding of the red white and blue logo which is similar to the color scheme of the American flag at any one of their gas outlets. This sort of branding has always been a clear attempt to make Exxon Mobil a household name across the world.
Finance and Accounting: Exxon Mobil stock price has been steadily suffering owing to the drop in oil prices, as of 2/4/15 Exxon Mobil (XOM) was at $91.57 compared to $100 per share over 6 months ago. The company has been managing its debt well with a debt to equity ratio of only .12 however the quick ratio seems high at .55 which shows the company is facing cash covering issues. Net income has increased by 2.5 % as compared to q1 last year. As mentioned earlier revenue has dropped slightly but is still ahead of the industry average. Even though earnings per share has been showing improvement by over 5.6% when compared to a quarter from a year ago , analysts are expecting a weak 2015 in terms of earnings.(Owusu, 2015)

Exxon Mobil’s Chemical Business

As the above has given a state on where Exxon Mobil stands in the current global petro chemical industry, we will focus specifically on its chemical business. This is one of Exxon Mobil’s few businesses whose revenues have shown steady growth with $2.3 Billion in 2009 and has grown to $3.8 billion in 2013. To better understand the chemical business the following SWOT analysis has been analyzed.
Strengths: The chemical business of Exxon Mobil has highly competitive assets and proprietary technologies owing to their diligence in investing in R&D. A great differentiator with their competition is quality of their chemical offerings. Another big differentiator of the chemical business is a hybrid of the Upstream and Downstream business which allows Exxon Mobil to manufacture chemical products for higher end value services. Exxon Mobil has a high availability of feed stocks which provides it with flexibility to meeting growing demands in this sector.
The chemical business has a global presence with manufacturing plants in major regions with an emphasis on everyday consumer and industrial by products. These highly competitive facilities help Exxon Mobil meet demands from Asia, Africa, the middle-east as well as other growing markets. With the ever changing uses and product lines which require the chemical business product base, Exxon Mobil is in the best scenario to properly address any changing situation. Exxon Mobil’s chemical business is also known for its record breaking safety performance which is very important in terms of developing and maintaining labor to work in dangerous environments such as oil rigs or chemical plants.
Weaknesses: Although the chemical business has not seen sheer drops in revenues an earnings as the oil industry, it is however tied to the petrol and oil arm of Exxon Mobil and if the current crisis of over production of oil continues. This will also creep into lowering prices of niche products in the Chemical business.
Opportunities: The manufacture of industrial and consumer goods in the Asia Pacific region has been driving the demand for chemical products which are being used in the manufacture of chemical and industrial goods. The opportunity lies in the fact that as the middle class consumers seek higher standards of living, the demand for such products will keep requiring designer chemical base materials which is Exxon Mobil’s forte. Exxon Mobil has determined a major opportunity in the area of premium polymers and plans to invest in their Texas facility to meet the growing global demand.
Threats: The overall threat to the chemical business is three fold, a) a drop in demand for chemical based products, which is rather weak since studies do not indicate that consumer demands are not expected to decline, b) A more important threat is the slowdown in product development which can happen to companies in this sector who do not keep investing in new talent and better technology, and c) the overall threat of further oil prices decline which will overall trickle down to the chemical business bottom line.
Analysis and Recommendations: Overall when compared to their other lines of business, Exxon Mobil’s chemical business is in highly favorable conditions. The company should focus on research and development of new product bases as well as study new ways to lessen their dependency on the petro chemical arm of Exxon Mobil. Although the distribution channels are strong the company should look into furthering their business partnerships to further their reach into the developing world.
The chemical business should also focus on completing the elastomers facility in Saudi Arabia and pursuing an aggressive campaign to explore the region. Since the chemical business is directly related to consumer goods, Exxon Mobil should specifically target and aggressively market to the millions of companies that can use their products and jointly work with their existing clients to brainstorm and help develop new uses and product lines. This specifically will help Exxon Mobil’s Chemical business maintain its standing as a leader in designer chemical products and will be the key to the company’s long term survival.

References

Exxon Mobil 2013 Summary Annual Report, Delaware : Investors:
Annual Reports and Proxy Statements. Retrieved from http://cdn.exxonmobil.com/~/media/Reports/Summary%20Annual%20Report/2013_ExxonMobil_Summary_Annual_Report.pdf7>
(C.Krauss), 2015, “Exxon Mobil revenue and profit off 21% on oil decline”. Retrieved from: http://www.nytimes.com/2015/02/03/business/energy-environment/exxon-mobil-q4-earnings-decline.html?_r=0
(T.Owusu), 2015. “Exxon Mobil (XOM) Stock Falls Today as Crude Prices Decline”. Retrieved from: http://www.thestreet.com/story/13035192/1/exxon-mobil-xom-stock-falls-today-as-crude-prices-decline.html