H. Igor Ansoff, also known as “Father of Strategic Management,” propounded a model of Strategic Management, which is a profit enhancing model that predicts the future environment turbulence of companies and helps measure the company’s own strategic model. The Ansoff model of corporate strategy is predictive and mathematical which provides a clear understanding of the coming future and chaos associated with it. This model of strategy has been used for analysis of more than 1,100 companies with accurate results.
This research project is an intelligence based analysis of Exxon Mobil Corporation, conducted by a group of Masters of Business Administration (MBA) students at Dallas Baptist University, for their capstone project as part of the Strategic Management Decisions, taught by Dr. Jim Underwood. The group has tried to measure the nature of future environment turbulence of the Exxon Mobil based on the analysis of its competitors and the industry as a whole and assessed the internal state of the company.
Ansoff promulgates that the level aggressiveness of the company’s responsiveness towards the future environment turbulence determines the level of profitability and efficiency in the company. The research group members: • Alice Gignac Sommerville & Associates, P. C. • Anuj Shrestha full time student • Andy Gbefo full time student • Dipesh Bhatt full time student ____________________________________________________________Executive Summary This project was conducted to analyze Exxon Mobil.
All research was obtained from public resources for the purposes of the ethical standards proposed by Dr. Jim Underwood. Conclusions The research led the team to come to the following conclusions, that ExxonMobil is at the top of the industry and that is not an accident. The corporation has 2 marginal gaps and 1 serious gap that were identified in the analysis, but the overall performance of the company is aligned with the norm of the market or at the level above. The marginal gap from the product portfolio can be explained by the nature of the market.
The company has little need to constantly diversify its products because oil is a natural commodity that people will always be in need of, therefore the effort of research is put in making the current products more efficient and effective. The second marginal gap is from the management. The market would expect an empowering leadership style to be in most companies today, but ExxonMobil takes a different approach of empowering the people, but at the same time expecting results. The management’s attitude towards risk also plays a role in the marginal gap, which falls a little below the market line.
The 1 serious gap that was identified is from the organizational structure, which is divisional, yet keeps traditional hierarchy. The focus of power is definitely by the senior executive and the board of directors, which turns some people off, but ExxonMobil believes is best for their company. ExxonMobil may look rigid to some people on the outside, but research shows that there is a reason for everything the company puts into place. Let history and current rankings show that ExxonMobil can continue moving in the same path, because they are aware of the changes in the market. _________________________________________________________Strategic Segmentation Exxon Mobil Corporation operates around the world under hundreds of names and is segmented in various businesses ranging from oil production and marketing to production of petro chemicals and power generation. The company has a wide variety of products, but for the purpose of the strategic management research it is important to identify the segment of the company that has to be analyzed. Various segments of the company have different sets of factors that need to be assessed.
Analysis of all the segments together yields inaccurate results and will violate the purpose of the research. For our research we have analyzed the company’s petroleum production and marketing segment. The research was conducted primarily on Exxon Mobil’s petroleum production, marketing and technology. _______________________________________________________ _____Methodology The analysis of Exxon Mobil was conducted employing a unique predictive model of strategic management developed by H. Igor Ansoff also well known as the “Father of Strategic Management”.
This method of analysis is founded on the level of chaos and the level of change in the future environment. Ansoff model stresses more emphasis on the identification of the nature of future environment and the firm’s current capabilities because the way business operates in an industry has changes significantly. Unlike the traditional management theories that depend on core competencies, competitive advantage, linearity, rationality and equilibrium, Ansoff model depends on the non-linearity, dynamic, and chaotic state of the environment.
The volatility of current market makes it well known fact that the market no longer strives to achieve equilibrium or rationality in the way of doing business. The traditional theories ignore the technology and the role it plays in creating the chaos in the market. Hence, the Ansoff’s model of strategic management was chosen over the traditional strategic management to accurately and mathematically predict the nature of the future competitive environment for the Exxon Mobil and asses the company’s strategic responsiveness to balance with that environment.
The effect of the balance between the future competitive environment and the company’s responsiveness is the high profitability. Fig 4. 1 (Underwood, 2002) Future Competitive Environment Future competitive environment consists of marketing and innovation turbulence of the Exxon Mobil’s competitors. Analyzing the future competitive environment is the understanding of the competition in the market in near future. The environment and the market are no longer simple and linear like it was couple centuries ago. It has become very complex, nonlinear, and unpredictable.
Competitor firms no longer abide by the principle of matching with their competitors in terms of the strategy. The traditional theory of linear market is no longer valid. The analysis of the future competitor environment is important because it gives our firm a yardstick or a measuring standard to align and restructure it so that it can have the flexibility and dynamic abilities to cope up with the volatility of the future environment. This is the segment where the firm needs to compete. Understanding the Future Competitive Environment
Before measurement and analysis of the competitor environment turbulence, it is very important to understand the factors of each segment or slices of the segment that gives measurement standard and what the turbulence really signifies. [pic] Fig. 6. 1 Figure 6. 1 shows us the different aspects of future marketing turbulence being measured on the scale of 1 to 5 point scale. The level of turbulence is extremely low at point 1 whereas extremely high or aggressive at point 5. For an example if the turbulence for sales aggressiveness is expected to be aggressive it will fall on 4 to 5 scale that signifies the aggressiveness mathematically. pic] Figure 7. 1 shows us the different aspects of the future innovation turbulence being measured on a scale of 1 to 5. Just like the future marketing turbulence the level of turbulence is very low at point 1 and extremely fast or aggressive at point 5. This can be illustrated with an example. If the future innovation aggressiveness of oil and gas companies is expected to be aggressive it will fall between 4 or 5 scale. After these two turbulences are calculated they are averaged to determine the future environment turbulence.
The future environment turbulence provides a metaphorical description of the coming environment or the state of future. The resulting average turbulence resonates to the desired profile of the Exxon Mobil to be achieved in next three years. The research was conducted on an intelligence basis using the questionnaire. The information was acquired from literature research. Organizational Assessment Using the Ansoff Model, the next step is to assess the organizational structure of the Exxon Mobil to see which level of turbulence the organization is profiled to suit (Underwood, 2002).
The organizational assessment is done on 12 broad areas of the Exxon Mobil and it uses the same 1 to 5 index scale as the environment turbulence. The result is obtained by administering the questionnaire and conducting a literature research. Gap Analysis Gap analysis is comparing the value between the future turbulence of the firm and the 12 broad areas of the firm. It is the difference between the future turbulence and the organizational assessment. The values of the gap analysis for each of the 12 broad areas show us how close to or how far is the firm from a profile that is suited to fit in the dynamic future environment.
The gaps forecast profit implications, and the following standards will be used in this analysis: -0. 5 or less = maximum profit profile -0. 51 to -0. 99 = marginal profit impact -1. 0 to -1. 49 = serious profit impact -1. 5 or more = critical profit impact ______________________________________________________ _____Future Turbulence Who are the competitors? Exxon Mobil is the world’s largest company by revenues and one of the largest publicly traded companies by market capitalization in the world (DeCarlo, 2012). Major Competitors (“Big oil,” 2009): pic] Fig. 2. 1 The Oil and Gas- Industry The oil and gas industry is one of the major players in today’s market economy. Although the oil and gas market is growing and the demand for the product will never cease to end but the sources for these products seems to have depleted (Kirby, 2004). The non renewable nature of oil and gas has prompted the major companies to become more innovative and technologically advanced. The advanced technology will help companies identify new ways to deliver these products to the growing population.
The companies have realized that the market is extremely volatile and the industry is heavily affected by even the smallest turmoil in politics or the nature around the world. The volatility of the market is defying the existing rules of economics (Brown & Sarkozy, 2009). The competition between the major oil and gas companies is high and so the marketing and sales initiatives seem to be aggressive. [pic] Fig 5. 1 Based on our research, the sales aggressiveness and marketing aggressiveness of the oil and gas industry will be 5 respectively. The oil industry is a very high profit earning industry compliments of rising prices (Pirog, 2012).
The 5 major players in the industry have been dominant in terms of market dominance and revenues especially Exxon Mobil is still the largest oil company. But the tide of the business is turning since more of the countries and states have started their own state backed national oil companies (National Oil Corporations- NOC) to take control of their reserves (“Big oil’s bigger,” 2011). Most of the oil reserves are distributed between the Middle East and Europe (Global Business Insights). It’s evident that the Middle East is always in turmoil which causes the volatility in the oil industry.
The volatility and instability of the government in the major petroleum producing countries has made the partnership between the major giants of oil industry and state backed petroleum industries very vulnerable. The result is the very aggressive marketing strategies adopted by the oil industries to gain their market share and sell more of their product. The competition not only exists between this big oil corporation and the NOC’s in terms of marketing and sales but, there is also a competition to increase the depleting reserves, which are majorly controlled by the NOCs (Jaffe & Soligo, 2007).
Hence we conclude through our research the oil and gas industry will have a very aggressive marketing and sales strategies amidst the volatility and uncertainty of the industry. The oil industry will come up with better working innovation in advertisement and also pertaining to the environment and pricing concerns they will try to make positive impacts in the minds of the customers through well-planned public relations. The annual reports of the top oil and gas companies explain that the major goal of these companies in coming future will be to expand in current market (Bombourg, 2012).
The major oil companies are competing with each other to increase their market share. The market strategy will be to expand the market share and the turbulence is determined to be around the scale of 5. Based on the reports prepared by OPEC and the international energy agency, the oil industry is struggling to keep up with the increased demand (Opec. org, 2011), (International Energy Agency, 2012). Despite the higher prices and political turmoil there hasn’t been a serious shortage of supply although the demand has been steady (Brown & Sarkozy, 2009.
The industry capacity Vs the demand factor can be expected to be on a 2. 5 scale, where the industry capacity is slightly overrun by the demand but the industry will try to come to equilibrium state in future. Averaging the four factors the future competitor marketing turbulence will be on a scale of 4. 37. [pic] Fig 7. 1 The oil and gas industry trades a commodity that is depleting every day. There is a huge competition between the companies to find the new sources of oil and gas. The research and development expense by the major oil and gas corporation is around 3% of their total revenue (YCHARTS, 2012).
This industry is mainly involved in the activities like exploration to find the new sources or utilize the existing sources more efficiently. The field has many diverse areas to improve its production by improving the technology. The oil and gas companies deal with extreme and harsh conditions while extracting their product, hence the investment in the innovation and research and development is very competitive (IBM Global Services, 2004. With our research, we have found that innovation aggressiveness in oil and gas industry is highly competitive and it’s scale of 5.
The rate of technological changes however is moderately fast and lies on the scale of 3. The technology is the oil and gas company need to be tested for a long time before it is commercialized. It often takes around 16 years for the technology to be adopted commercially starting from its conception. It’s a long process and even though the R&D expenses are competitive, they are not considered enough for the rate of technology change to be faster (Neal, Bell, Hansen & Siegfried, 2007). The oil and gas industry deeply relies n petroleum resources to develop all its products. Although there has been some impressive development in the 3-D and 4-D imaging and deep water exploration in recent years (Voosen, 2011), it’s not helping the industry develop newer products but rather find newer sources for the petroleum and enhance their existing products. Although some of the companies like Shell have invested heavy on alternative energy products, the innovation strategy for this industry is 3. 5. The consumer demand for energy is supposed to increase by 40% by 2030 (Tochner, 2012).
While the oil and gas industry are trying to find alternatives to the energy they are also trying to find ways to drill in remote locations and increase the output. For the present situation the industry will try to meet the current consumer demand and try to anticipate the future demands. The turbulence scale will be 3. 5. No information was available for the product life cycle. Thus, the average future innovation turbulence will be 3. 75 Averaging the future marketing turbulence and future innovation turbulence we can get the future environment turbulence to be on a scale of 4. 5. _______________________________________________Strategic Aggressiveness Assessment [pic] Marketing Aggressiveness includes sales, public relations/advertising, and strategy. The firm uses these parameters in its overall marketing strategy in order to ensure that it achieves the needs of its market segments. A 2012 analyst report shows that ExxonMobil accounts for about 1. 95mn b/d of crude oil distillation, representing more than 11% of the US total (BMI). Factors contributing to this position are elucidated in the various attributes analyzed hereunder. 1.
Sales Aggressiveness: Gap = 0 Aligned ExxonMobil’s Sales Aggressiveness is rated at 4. 8 (highly aggressive). Sales aggressiveness translates into better annual financial performance. According to ICIS company intelligence, ExxonMobil’s financial performance increased by 26. 4% between 2006 and 2008; and by 23. 4% between 2009 and 2010 (ICIS); and the firm’s 2011 fourth quarter profits soared to 53% (Krauss, 2011). ExxonMobil’s sales aggressiveness includes strategies such as Exxon Mobil Reward Card that boosts sales through discounts for customers at the gas pump (svmcards. om). Another sales strategy is increased refining capacity in countries such as Singapore in order to boost sales to meet the exponential increase in demand for petroleum products in countries such as China (Zhihong, 2009); and new mergers and acquisition such as those with XTO Energy to meet increased global demand forecast of 2. 1 – 2. 2% from 2012 to 2014 (BMI). In order to boost sales of its gasoline product, ExxonMobil established more than 9763 retail networks across the United States (BMI) 2. PR/Advertising Aggressiveness: Gap = 0 Aligned
ExxonMobil’s PR/Advertising Aggressiveness is rated at 5. 0 (highly aggressive). ExxonMobil pursues aggressive advertising strategies both in the United States and abroad. Kimberly (2009) revealed that in 2009, ExxonMobil spent ? 8. 9 million in the United Kingdom, and $111million in the United States on media advertisements to boost its sales and marketing operations. However, inaccurate claims about its liquefied natural gas led to sanction by the UK media watchdog – Advertising Standards Authority (Kimberly).
In a push to expand the firm’s production and boost competitiveness the firm’s CEO Rex Tillerson, explained that “the company is running advertisements, conducting town hall meetings and talking to regulators to convince Americans that drilling using a method known as “fracking” is safe (Koenig and Kahn, 2011) 3. Market Strategy: Gap = 0 Aligned ExxonMobil’s Market Strategy is rated at 5. 0 (aggressive market share expansion). Research indicates that ExxonMobil has a track record of adopting aggressive market strategies to stay at the helm of the global oil and gas industry.
It has pursued increased market share strategies both in the United States and in the global front through mergers, acquisitions, and joint ventures including: a merger with Mobil Corp in 1999 for $81billion (CNN Money); acquisition of XTO Energy in 2009 for $41 billion (Davis, 2009); and a joint venture with China Petrochemical Corp’s subsidiary – Sinopec Group – in 2011 for the shale gas market (Wang, 2011); acquisition of Phillips Resources Inc. , Warrendale, Pa. , and TWP Inc. , Butler, Pa. , for $1. 69 billion in cash through the purchase of 317,000 acres in Pennsylvania’s Marcellus to boost shale gas exploration (oil and gas investor. et) among others. Another move to strengthen its global expansion led to a joint venture with Rosneft, Russia’s leading oil producer to carry out oil exploration and development (Gorst, Clover, and Crooks). However ExxonMobil’s $4 billion bid in 2011 to acquire a share of Ghana’s Jubilee Oil was abandoned due to stiff opposition by Ghana’s government (Hoyos, 2011). ExxonMobil’s aggressive market strategy culminated in US domestic oil production of 423,000b/d, and a 6% domestic market share of gas production standing at 40. bcm per annum (Business Monitor International). [pic] Innovation aggressiveness defines the firm’s level and capabilities in creating newly developed or highly improved products to match or exceed customer tastes and demands in order to prevail in the face of future turbulence. Innovation aggressiveness takes into account R&D spending, product life cycle plan, and customer focus. 1. Current Level of R&D Spending: Gap = 1. 7 Aligned ExxonMobil’s current level of R&D Spending is rated at 5. 0 (highly aggressive).
In its quest to boost its pedigree as a highly innovative company, Howell (2009) reported that ExxonMobil had invested $600million to research and to develop next-generation biofuels produced from sunlight, water and waste carbon dioxide by photosynthetic pond scum. Figures released by Grueber, and Studt (2010) put ExxonMobil’s R&D spending in 2008 at $847,000,000, while in 2009 the figure stood at $1. 05 billion. The report suggested that a significant percentage of the budget might be for research into bioufuel development. 2. Product Life Cycle Plan: Gap = not applicable
Oil and gas are the core business of ExxonMobil, along with several other products including equity natural gas, finished lubricants, chemical products such as plastics, oriented polypropylene film, synthetic rubber, fluids, plasticizers; basic chemical building blocs such as ethylene, ethylene glycol, propylene and paraxylene; and fuel and lubricant additives and synthetic lubricant base stocks, among other (Corporate Watch). While most of these products have been in production and in the market for several years, no definite information is available concerning the product life cycle plan of ExxonMobil. . Customer Focus: Gap = 0. 5 Aligned ExxonMobil’s Customer focus attribute is rated at 4. 2 (we anticipate customer needs). ExxonMobil strives to anticipate customer needs through various strategies. A 2011 report indicated that the company has designed a “Return and Earn Loyalty Program” for its branded wholesalers across the United States to enhance their technology in facilitating better rollback and reward tracking for customers at the gas pump, a move that could increase value for customers and pin down their loyalty (Customer News).
In anticipation of China’s growing need and demand for petrochemical products such as plastics, synthetic rubber, and aromatics for polyester productions to propel its industrialization and development, ExxonMobil took the lead in introducing and exporting these products to China, indicated a company senior executive (Harris, 2007). [pic] Product portfolio strategy includes product diversification and product life cycle plan. In order for the firm to compete effectively or to supersede its competitors it is necessary to ensure products are designed and produced according to the pace of change in demand as well as technology.
Adequate life cycle planning will put the firm squarely in control of the turbulence in the environment. 1. Diversification (Product): Gap = -0. 85 Marginal performance gap ExxonMobil’s product diversification is rated at 2. 5 (little consideration of product diversification outside of improvement). ExxonMobil produces a huge array of products primarily derived form oil, gas, and petrochemical derivatives. However, evidence shows that the firm is capable of diversifying its product portfolio.
For instance, a June 2012 report by Enhanced Online News indicated that ExxonMobil has signed a joint venture agreement with Saudi Basic Industries Corporation to establish a rubber industry in Saudi Arabia (EON). Apart from concentrating on fossil fuels, ExxonMobil has teamed up with Synthetic Genomics Inc. to develop algae-based biofuels (Howell, 2009); a strategy aimed at diversifying into renewal source of energy. 2. Product Life Cycle Balance: Gap = 0. 85 Aligned ExxonMobil’s product life cycle balance is rated to be 4. 2 (All, with emphasis on I, II, III).
We have no clear information regarding ExxonMobil’s product life cycle balance. However, the nature of ExxonMobil’s products indicates that it is unlikely any of them will reach the decline stage – Stage IV. Moreover, ExxonMobil’s high level of market aggressiveness and innovation aggressiveness will buoy the firm to constantly improve, renew and rejuvenate old products, while finding strategies to develop new innovative products. [pic] Product Technology Focus described the degree and commitment of the firm in adopting and implementing technological innovations in its product development and operations.
Product technology focus includes technology applications and technology philosophy. 1. Technology Applications: Gap: -0. 2 Maximum performance gap ExxonMobil’s Product Technology Applications is rated at 4. 3 (stay slightly ahead of the market) Currently ExxonMobil is aggressively applying latest technology in trying to develop lithium-ion battery cells to drastically minimize overheating and boost performance of electric vehicles (gm-volt. com).
Research shows that ExxonMobil has a long history of utilizing technology in its operations. Duvall (2006) ascribed the firm’s enviable success to its overwhelming reliance on technology to explore and develop new oil and gas fields, enhance the performance of its refineries and chemical production facilities, as well as to maximize the efficiency its supply chain system. In recent years ExxonMobil has surged ahead of the competition in utilizing advanced and sophisticated fracking technology to extract oil and gas successfully from shale deposits (Kanter, 2011).
The acquisition of XTO Energy was described by Gelsi (2009) as another step in enabling ExxonMobil to accelerate the development of unconventional natural gas and oil resources. 2. Technology Philosophy: Gap = 0. 3 Aligned Exxon Mobil’s Technology philosophy is rated at 4. 8 (we want to be the consistent first mover in technology adoption). Mitchell (2006) reported a policy statement by Patricia Hewllet, vice president of global IT at Exxon
Mobil, where she pinned ExxonMobil’s technology philosophy down to “technology and business process standardization”, and aggressive reliance on “leading-edge, best-of-breed technology”. Consequently, ExxonMobil’s applies its overwhelming technology advantage to dominate both competitors and whole countries (Bloomberg Business Week Magazine). __________________________________________Management Responsiveness Assessment [pic] Rex Tillerson, the current CEO of the largest oil and gas company succeeded Lee Raymond in 2006.
Tillerson graduated with a Bachelor of Science in civil engineering from the University of Texas at Austin in 1975. After starting out as an engineer in Exxon in 1975, he has slowly moved up the ranks. – President of Yemen Khorat Inc. (1995) – Vice President of Exxon Ventures (1998) – Executive Vice President of ExxonMobil Development Company (1999) – President and Director of ExxonMobil (2004) 1. Attitude Toward Change: Gap = 0Aligned Rex Tillerson’s views and attitudes towards change towards alternative fuel and the environment matched the competitor’s views in most cases.
Oil and gas is still going to be a primary source of fuel in the next 20-30 years; however; energy companies will continue to seek the next source of energy. Under Tillerson’s leadership the company has also made a commitment to alternative fuels. In 2009, the company announced that it would invest $600 million by partnering with Synthetic Genomics in the development of photosynthetic algae (Quon, 2012). The results of the investment are still unclear and other oil companies that made similar investment have parted ways with their partners.
In an oil and gas industry, the subject of global warming or climate change is always a tricky issue. Tillerson’s predecessor, Lee Raymond’s stance of being an outright skeptic did very little to win over the critics. In the recent years, Tillerson has taken a somewhat different route. He has accepted global temperatures are rising, but the magnitude of the impact of rising temperatures is still uncertain (Souder, 2012). His statement may not win lot of the critics of the oil and gas industry; however, it is a change in the hard-line stance from the previous CEO. . Attitude Towards Creativity: Gap = 0Aligned Tillerson believes that oil and natural gas will continue to play a big role in providing energy for the growing economy in the future. Innovation in technology is an important area to because the source of energy is often found in challenging environment. Innovative technology like Exxon’s Fast Drill technology has allowed faster and cheaper way of drilling for oil (Business Wire, 2010). Innovation will keep playing a part in Energy companies like Exxon to make their systems more efficient.
Rex Tillerson’s attitude towards creativity matches the predicted future turbulence. 3. Attitude towards Subordinates: Gap = no information found [pic] The purpose of the management segment of the Ansoff model is to determine if the management is capable of meeting the needs of the company in an ever changing chaotic environment. The attitude of the management determines where a company is headed in the future. Currently, oil and gas is the bread and butter of the energy industry, 30- 40 years down the line these companies may have to fight for their share of the market in an alternative energy. . Leadership Style: Gap = -0. 75Marginal Performance Gap In the future, ExxonMobil leadership will need to a adopt a more empowering or inspirational leadership style. ExxonMobil adopts a disciplined leadership style. ExxonMobil’s top level employees have been defined as being influenced by the military rules, secretive and conservative. (Waldman, 2012). However, currently ExxonMobil’s no-nonsense result oriented leadership style has been able to make them not only the biggest player in the oil and gas industry, but one of the biggest companies in the world. 2.
Attitude Towards Risk: Gap = -0. 75Marginal Performance Gap As any oil and gas industry, ExxonMobil would expect risk to be a huge part of their management style. However, for one of the biggest company in the world, ExxonMobil is very risk-averse (Hobson, 2012). During 2008 when other oil companies were overspending for projects to take advantage of the rising oil price, Exxon refused to do so and stuck to its guns even when faced with criticism (CNN, 2009). ExxonMobil’s management attitude would give them a score of 3. 5. Attitude Towards Subordinates: Gap = no information found [pic]
The organizational culture includes interlocking sets of goals, roles, processes, values, communication practices, attitudes and assumptions. Using the Ansoff model, the components of the organizational culture for Exxon Mobil includes organizational values, the employee values and the rewards and incentives for employees. 1. Organizational Values: Gap = 0. 25Aligned The current organizational value of ExxonMobil is between ‘challenge the status quo’ and ‘create the future’. The company expects the demand for energy to be higher by 30 percent in 2040 compared to 2010, owing to growth n India, China, Africa and other growing economies (Outlook, 2012). ExxonMobil expects to be in the forefront when there is a growing demand for energy in the growing economy. ExxonMobil’s current attitude exceeds the predicted future turbulence score of 4. 25. 2. Value of Employees: Gap = 0. 25Aligned ExxonMobil places a very high emphasis on the employees. Unlike most top companies whose top position is occupied by people they have hired from a competing industry or a different company altogether, ExxonMobil has a culture of promoting employees from within. (Coll and Myers, 2012).
ExxonMobil’s value of employees score is a high of 4. 5. 3. Rewards and Incentives: Gap = no information available [pic] 1. Formal Structure: Gap = -1. 25Serious Performance Gap The formal structure of Exxon Mobil is a divisional structure, which they call a global functional organization. This places the company at a score of 3, with a performance gap of -1. 25 to measure to the industry norm. Even though ExxonMobil is not matching with the norm, the company believes in and is deeply founded in their structure. There is a system of standards that is expected across all areas of the company, including the numerous subsidiaries.
Some standards range from systems standardization, work processes, tools and technology (Reece, Booth, 2007). 2. Focus of Power: Gap = -1. 25Serious Performance Gap Exxon Mobil’s focus of power is based on the senior executive and bureaucracy. Although this focus of power leaves the company at a -1. 25 serious performance gap, the system works for the individual company. Exxon Mobil is set up so that the board of directors can choose the company’s leadership structure, more so than the investors (The Chemical Engineer). Currently, Mr. Rex Tillerson serves as the CEO and the Chairman of the
Board, which the board feels is in the company’s best interest (The Chemical Engineer). The focus of power is known, and some may look down on the rigid structure, but ExxonMobil continues to be dominant oil company in the world. [pic] 1. Speed of Decision Making: Gap = 0Aligned ExxonMobil has mastered the art of speedy decision-making. The entire IT department is founded on improving communication systems so information can flow efficiently throughout every level of the corporation. The team ranks ExxonMobil at a 4. 25 or higher in fast decision making, therefore are aligned with the market. 2.
Use of Early Warning Systems: Gap = no information available [pic] 1. Attitude Towards Adapting Technology: Gap = 0Aligned [pic] The analysis team ranks ExxonMobil at a 4. 25 or higher with the company’s attitude toward adapting new technology applications for internal use. The above chart shows the strategy that ExxonMobil implements to integrate IT systems with excellence across the various divisions of the corporation (Reece, Booth, 2007). Over time, the implementation of the IT systems have allowed the company to focus on cost management as well as have operational efficiency and steady results.
Because the company has many products that requires high technology such as machines to get heavy oil from tight reservoirs or deep water, the high level of technology use spreads into all areas of the company. 2. Level of Backup Systems: Gap = no information found 3. Strategic Planning Process: Gap = 0Aligned The score of the strategic planning processes used by ExxonMobil is under the future based tools, caring little about the past historic competencies, which is a 4 or higher. Due to the nature of the product line of ExxonMobil, the company must be in constant planning for the next ways to extract oil more efficiently and effectively.
The history helps ExxonMobil be confident in their abilities, but in no way do they have time to dwell in the past, as they need to be at the top of their game to keep the spot of number one. Bianco states in BusinessWeek that, “They only have one way of doing things: the most efficient, with the least risk. They want to see the studies. If the studies are yours, they want to redo them. They have a clear line of sight to the target. ” From the outside looking in, the company seems very focused to be the best and this requires excellent strategy processing. 4.
Use of Technology: Gap = 0. 75Aligned ExxonMobil utilizes extensive use of technology tools for futuristic information gathering. The company does not only use such tools, but the R&D division is also developing such tools to be the best of the best. The company has a reputation for technical and operational excellence, therefore they would be considered trailblazers and not just keeping up the with norm (Pratt, 153). [pic] 1. Senior Executive Team Skills: Gap = 0Aligned The analysis team scores ExxonMobil at a 4. 25 for the senior executive team skills for creative strategic work.
From the outside, Rex Tillerson looks like a driven person of deep convictions and true to his ways. One example is his attitude towards global warming, which he is quick to mention is man made. He presents the problem as a manageable challenge and not a crisis, which extends to the value of the company. Mr. Tillerson would rather continue creating oil, gas and coal to provide jobs for people all around the world rather than stop production and focus on going green (Helman). This small example is one way to know that the skill level of the top executives is high both in strategy, goal setting, and creativity. . Staff and Managers Skills: Gap = 0Aligned Not much information is found from outside the company about the creative strategic work of the staff and managers, but looking at the statements from the company and looking at the results of work can give a good estimate of the answer. The simple statement from the business model that makes an impact is that ExxonMobil attracts and retains exceptional people (ExxonMobil, 2011). Part of the goal is to recruit and develop employees with a wide range of global experiences and backgrounds.