Question

News or Article Analysis

Identify and analyze a current business event or article that illustrates a strategic management topic covered in your text. The analysis should be in the form of a 2 pages (not including the cover page). The paper should include a brief (one paragraph) summary of the article with the remainder of the paper focused on analyzing how it relates to course concepts. You can also include their assessment of what you expect will happen to the firm as well as recommendations for strategic improvements.

Answer 1

Brief Summary:

The ExxonMobil case examines ExxonMobil, the biggest publicly listed energy company in the world, as a problem. Although it generated some of the best capital returns and assets in the energy industry, it has been engaging in many issues since the beginning of 2010. Because their stocks did not generate good yields for shareholders, their production also decreased. The case discusses the company's challenges. It also analyzes the company's opportunities. The case evaluates the strategies of ExxonMobil to address the challenges as well as the initiatives revealed for assertive future growth.

Issues:

The article is composed to attain the following learning objectives:

• Understand the problems and difficulties in the oil and gas sector.
• Research the nature and effects of ExxonMobil's problems.
• Identify ExxonMobil opportunities.  
• Examine ExxonMobil's tactics to tackle its problems.  
• Evaluate ExxonMobil's long term strategy.

Introduction

ExxonMobil Corporation, the largest publicly traded Oil and Gas Company in the world, announced on 31 January 2019 that it would simplify its upstream organization and centrally incorporate projects across the company to support their growth plans announced in March 2018. Three new upmarket companies, ExxonMobil Upstream Oil & Gas Co. and ExxonMobil Upstream Integrated Solutions Co, will be set up by April 1, 2019. In addition, the company would also create ExxonMobil Global Projects Company to expand its project management capacity and centralize key capital planning and execution skills to support the three business segments–upstream, downstream and chemical. They simplify and integrate their upstream organization to better focus on their industry-leading portfolio of acquisitions and successful exploration in the U.S. Permian Basin, Mozambique, Guyana, Papua New Guinea, and Brazil. The emphasis is on increasing overall profitability by improving and integrating the upstream business in downstream and chemical segments in order to exploit its unique capabilities across the whole value chain.

Course concepts:

Challenges faced by ExxonMobil:

The ExxonMobil share price dropped 5.1% on 2 February 2018, worst single day since 2011. The fall in stock prices was due to the company's performance in the final quarter of 2017. In addition to the expected revenue, the company reported a decline of 3.2 percent in oil production. Production has fallen to 244,000 barrels a day in the United States. ExxonMobil reported net sales in the fourth quarter of 2017 of $8.4 billion in the same quarter of 2016, compared to $1.7 billion in 2016–a $6.7 billion increase.

Where ExxonMobil can grow:

Though many experts expressed concern regarding ExxonMobil's long term growth prospects, despite its really not so daunting financial and decreasing stock prices, others thought that the firm had the capacity to profitably locate and expand huge power reserves. Global oil demand increased in 2017 by 1.6 million barrels a day to 98 million barrels a year. Over the decade, global demand for oil averaged one million barrels a day. ExxonMobil had forecast that global demand for oil would rise by 2040 to 118 million barrels a day.

Handling the challenges:

ExxonMobil outlined an aggressive growth plan in March 2018, which would double its income and cash flow by 2025. It aimed at achieving this goal by increasing its expenditure over eight years between 2018 and 2025 to a total of $230 billion. The company expects annual operating cash flow of over $60 billion by 2025, assuming the price of oil was $50 a barrel. At constant 2017 prices, ExxonMobil's income was expected to rise by far more than 100 percent to $31 billion in 2025, out of 2017's adjusted income of $15,3 billion with the exclusion of US tax reforms and impairments.

The Future:

ExxonMobil revealed in March 2019 that it is updating its expansion plans. It anticipated its annual profit potential to grow by over 140 percent to 2025 on adjusted earnings in 2017, on $60 per barrel of expected oil prices and predicated on 2017 margins.

This article focuses on the strength, weaknesses, opportunities, and threats for ExxonMobil.