Global Global EnvironmentEnvironment

By the Knight-Lee Marketers

Presentation OutlinePresentation Outline

BackgroundBackground Industry CharacteristicsIndustry Characteristics Company HistoryCompany History Company OverviewCompany Overview

Article SummaryArticle Summary Where ExxonMobil Went WrongWhere ExxonMobil Went Wrong CompetitorsCompetitors Problem ResolutionProblem Resolution Marketing ImplicationsMarketing Implications OverviewOverview

BackgroundBackground

Industry Characteristics: Oil & GasIndustry Characteristics: Oil & Gas

Operating expenses are relatively fixedOperating expenses are relatively fixed Oriented towards the production of gasolineOriented towards the production of gasoline Location of an oil refinery has an important Location of an oil refinery has an important

impact impact Low competition?Low competition? Poor environmental practicesPoor environmental practices

BackgroundBackground Company HistoryCompany History

Exxon and Mobil were descendants of the John D. Exxon and Mobil were descendants of the John D. Rockefeller corporation, Standard Oil which was Rockefeller corporation, Standard Oil which was established in 1870established in 1870

Formed in 1999 by the merger of two major oil Formed in 1999 by the merger of two major oil companies, Exxon and Mobil. companies, Exxon and Mobil.

2000, ExxonMobil sold a refinery in Benicia, 2000, ExxonMobil sold a refinery in Benicia, California and 340 Exxon-branded stations to Valero California and 340 Exxon-branded stations to Valero Energy Corporation, as part of an FTC-mandated Energy Corporation, as part of an FTC-mandated divestiture of California assetsdivestiture of California assets

2005 - ExxonMobil's stock price surged in parallel 2005 - ExxonMobil's stock price surged in parallel with rising oil prices, surpassing General Electric as with rising oil prices, surpassing General Electric as the largest corporation in the world in terms of the largest corporation in the world in terms of market capitalization.market capitalization.

BackgroundBackgroundCompany OverviewCompany Overview

Organizational structure built on international Organizational structure built on international businessbusiness

Goal to continuously achieve superior Goal to continuously achieve superior financial and financial and operating results while operating results while adhering to the highest adhering to the highest standards of standards of business conduct.business conduct.

A multi-national American corporationA multi-national American corporation Headquarters located in Irving, TexasHeadquarters located in Irving, Texas

BackgroundBackground

Company OverviewCompany Overview Largest publicly traded integrated Largest publicly traded integrated

petroleum and natural gas company petroleum and natural gas company in the worldin the world Largest company revenue: $377.6 Largest company revenue: $377.6

billionbillion Largest of the six biggest oil companiesLargest of the six biggest oil companies Markets its products around the world Markets its products around the world

as Exxon, Mobil & Esso. as Exxon, Mobil & Esso.

BackgroundBackground

Company OverviewCompany Overview 4 Operating Divisions:4 Operating Divisions:

Upstream Upstream (oil exploration, extraction, shipping)(oil exploration, extraction, shipping)

Downstream Downstream (marketing, refining)(marketing, refining)

ChemicalChemical Global Services Global Services (Information technology, support (Information technology, support

centers)centers)

Article SummaryArticle Summary

ExxonMobil posted the largest profit in ExxonMobil posted the largest profit in the history of corporate America in the history of corporate America in 2005, earning a profit of $36 billion. 2005, earning a profit of $36 billion. ExxonMobil lobbies Congress in ExxonMobil lobbies Congress in support of drilling in the Arctic Refuge, support of drilling in the Arctic Refuge, funds organizations to confuse the funds organizations to confuse the public about global warming, and is public about global warming, and is still battling settlements of those who still battling settlements of those who lost everything in the Valdez oil spill. lost everything in the Valdez oil spill.

Where ExxonMobil Where ExxonMobil Went Wrong…Went Wrong…

ExxonMobil is the only major oil ExxonMobil is the only major oil company that is a member of Arctic company that is a member of Arctic Power.Power.

Arctic Power is a special interest group Arctic Power is a special interest group that supports drilling in the North Arctic, that supports drilling in the North Arctic, but neglects to inform the public on but neglects to inform the public on

important environmental important environmental

issues.issues.

Where ExxonMobil Went Where ExxonMobil Went Wrong…Wrong…

Opposed Kyoto Protocol, the global-Opposed Kyoto Protocol, the global-warming treaty, and stressed warming treaty, and stressed uncertainties in climate science.uncertainties in climate science. Stabilizing greenhouse gas Stabilizing greenhouse gas

concentrations in the concentrations in the

atmosphere at a level that atmosphere at a level that

would prevent dangerous would prevent dangerous

anthropogenic interference anthropogenic interference

with the climate system.with the climate system.

Advocacy OrganizationsAdvocacy Organizations

Exxpose Exxon Coalition is the Exxpose Exxon Coalition is the nation’s largest environmental and nation’s largest environmental and public interest advocacy public interest advocacy organizations.organizations.

““Toast the Earth”Toast the Earth” http://www.ExxposeExxon.com/movie

Exxon CompetitorsExxon Competitors

2004 Plan to Outpace 2004 Plan to Outpace the Competition.the Competition.

o Introduced by Rex Tillerson (Chairman Introduced by Rex Tillerson (Chairman and CEO of Exxon Mobil)and CEO of Exxon Mobil)

o 11 Billion invested in New Potential 11 Billion invested in New Potential World Class ProjectsWorld Class Projects

o Including two Plants in Qatar, the Including two Plants in Qatar, the Fujian Refining project in China and Fujian Refining project in China and the Jose Chemical Project in Venezuelathe Jose Chemical Project in Venezuela

o A Focus on Liquefied Natural Gas A Focus on Liquefied Natural Gas (LNG)(LNG)

Exxon Mobil V.S. Royal Exxon Mobil V.S. Royal Dutch ShellDutch Shell

World’s largest non state- World’s largest non state- owned oil corporationowned oil corporation

Estimated 35,000 Service Estimated 35,000 Service StationsStations

13.6 Billion Barrels in 13.6 Billion Barrels in Reserve Reserve

2006 Sales Growth – 1.9%2006 Sales Growth – 1.9%

22ndnd largest non state-owned largest non state-owned oil corporationoil corporation

Estimated 45,000 Service Estimated 45,000 Service StationsStations

11.8 Billion Barrels in 11.8 Billion Barrels in ReserveReserve

2006 Sales Growth – 1.8%2006 Sales Growth – 1.8%

State-Owned State-Owned CompetitionCompetition

• Saudi Armco

• Owned by Saudi Arabia

• World’s # 1 Oil Producer

• Supplies 10% of World’s Oil Demand

• Dates back to 1933

Exxon Mobil V.S. Saudi Exxon Mobil V.S. Saudi AramcoAramco

World’s # 1 World’s # 1 integrated oil integrated oil corporationcorporation

Produces 6.4 million Produces 6.4 million barrels per daybarrels per day

13.6 Billion Barrels in 13.6 Billion Barrels in ReserveReserve

World’s # 1 oil World’s # 1 oil producerproducer

Produces 8.9 million Produces 8.9 million barrels per daybarrels per day

259.9 Billion Barrels 259.9 Billion Barrels in Reservein Reserve

How has Exxon’s Plan How has Exxon’s Plan Faired?Faired?

““It's not necessarily the oil standard, but Exxon Mobil It's not necessarily the oil standard, but Exxon Mobil is the world's largest integrated oil company (ahead is the world's largest integrated oil company (ahead of BP and Royal Dutch Shell). Exxon Mobil engages in of BP and Royal Dutch Shell). Exxon Mobil engages in oil and gas exploration, production, supply, oil and gas exploration, production, supply, transportation, and marketing worldwide.” – transportation, and marketing worldwide.” – Hoovers.comHoovers.com

Provides fuel to 700 airports and more than 200 portsProvides fuel to 700 airports and more than 200 ports 40 refineries in 20 countries and service stations in 40 refineries in 20 countries and service stations in

over 100 countriesover 100 countries

Problem ResolutionProblem Resolution

After reading about what ExxonMobil isn’t After reading about what ExxonMobil isn’t

doing…doing…

We decided to focus on what ExxonMobil We decided to focus on what ExxonMobil is is doing…doing…

Problem ResolutionProblem Resolution

ExxonMobil is an OIL Company… whether we try ExxonMobil is an OIL Company… whether we try to fight global warming or not WE still use and to fight global warming or not WE still use and need oil.need oil.

As of 2007; ExxonMobil is:As of 2007; ExxonMobil is:

Problem ResolutionProblem Resolution Still donating over $100 million towards a Climate Still donating over $100 million towards a Climate

Change Program at Stanford UniversityChange Program at Stanford University Their scientists have written over 40 reports on Their scientists have written over 40 reports on

global warming to help fight it. global warming to help fight it. CO2 Emissions savings in the past 8 years have CO2 Emissions savings in the past 8 years have

saved 11 million metric tons or over 2 million cars saved 11 million metric tons or over 2 million cars off the road.off the road.

They donate millions to foundations to save animals They donate millions to foundations to save animals as well as now partnering up with auto as well as now partnering up with auto manufacturers to help on fuel economy. manufacturers to help on fuel economy.

They have also stopped funding many groups such as They have also stopped funding many groups such as

the Global Climate Coalition.the Global Climate Coalition. (groups that think (groups that think global warming is a lie by the government)global warming is a lie by the government)

Marketing Marketing ImplicationsImplicationsWhat does this mean in the eyes of What does this mean in the eyes of

International marketers?International marketers?

……Marketing ImplicationsMarketing Implications

Adaptation vs. Adaptation vs. StandardizationStandardization

Ethnocentrism:Ethnocentrism:

- - ExxonMobil's approach to their ExxonMobil's approach to their

business operations. business operations. -- They believed their culture was They believed their culture was

superior.superior.

Exxon Should Have Done…..Exxon Should Have Done….. Global Market Research & Analysis:Global Market Research & Analysis:

They need to understand global and local economic and They need to understand global and local economic and environmental factors that are affected by their environmental factors that are affected by their business. business.

Entry: Marketing & Advertising:Entry: Marketing & Advertising: Concentrate on World/geo-centric issues. Concentrate on World/geo-centric issues.

Concentrate on regio-centic demands.Concentrate on regio-centic demands. Use profits to increase research instead of decreasing Use profits to increase research instead of decreasing

consumer understanding.consumer understanding. Generate “favorable publicity”Generate “favorable publicity”

Global Localization:Global Localization: Needed to Stress “Think globally, act locally”. Needed to Stress “Think globally, act locally”.

Exxon Should Have Done…..Exxon Should Have Done…..

Marketing Goals:Marketing Goals: Increase customer lifetime value (CLV)Increase customer lifetime value (CLV)

Maximize Profits and demandMaximize Profits and demand

Create Competitive Advantage:Create Competitive Advantage: Generate favorable publicityGenerate favorable publicity Localize their pricing strategyLocalize their pricing strategy

OverviewOverview•BackgroundBackground

-Industry Characteristics-Industry Characteristics-Company History-Company History

-Company Overview-Company Overview•Article SummaryArticle Summary•Where ExxonMobil Went WrongWhere ExxonMobil Went Wrong•Advocacy OrganizationsAdvocacy Organizations•CompetitorsCompetitors•Problem ResolutionProblem Resolution•Marketing ImplicationsMarketing Implications

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