Table of content:
1. Overview and description of ExxonMobil 03
2. Analysis of the case questions 07
2.1. Question 1 (Pricing strategies applied by ExxonMobil) 07
2.2. Question 2 (Buyer reactions to changes in gas prices) 09
2.3. Question 3 (Reactions of ExxonMobil towards gasoline pricechanges by other companies) 11
2.4. Question 4 (ExxonMobil acts irresponsibly?) 12
2.5. Question 5 (Solution for rising gas prices) 14
3. Conclusion & Recommendation 16
4. Bibliography 18
Overview & description of ExxonMobil
ExxonMobil is the world’s largest publicly traded international oil and Gas Company. The Exxon MobilCorporation, or ExxonMobil, is and direct descendant of John D. Rockefeller’s Standard Oil Company. Formed on November 30, 1999, by the merger of Exxon and Mobil, ExxonMobil is the worlds largest company by revenue, at $405.billion for the fiscal year of 2007, having interchanged this status with Wal-Mart in recent years. Furthermore it is also one of the largest publicly held corporations by marketcapitalization of $390 billion. While it is the largest of the six oil “super majors with daily production of 4.18 million BOE (barrels of oil equivalent) in 2007, this is only approximately 3% of world production and ExxonMobil's daily production is surpassed by several of the largest state-owned petroleum companies”. When ranked by oil and gas reserves it is 14th in the world with less than 1% ofthe total. Currently the company ranks #1 in the world in net income, which was almost $40 billion last year.
Market Capitalization in $billion in the Gas and Energy Industry
Therefore, as the graph above illustrates ExxonMobil has just an overwhelming stake in the energy industry. For instance, Royal Dutch Shell is in terms of market capitalization half as big as ExxonMobil. TheExxonMobil Corporation global headquarters are located in Irving, Texas. ExxonMobil markets products around the world under the brands of Exxon, Mobil, and Esso. It also owns hundreds of smaller subsidiaries such as Imperial Oil Limited (69.6% ownership) in Canada, and Sea River Maritime, a petroleum shipping company.
The upstream division dominates the company's cash flow, accounting forapproximately 70% of revenue. With its CEO Rex W. Tillerson the company employs over “82,000 people worldwide, as indicated in ExxonMobil's 2006 Corporate Citizen Report, with approximately 4,000 employees in its Fairfax downstream headquarters and 27,000 people in its Houston upstream headquarters".
Furthermore, ExxonMobil is organized functionally into a number of global operatingdivisions. These divisions are grouped into three different categories:
• Upstream (oil exploration, extraction, shipping, and wholesale operations) based in Houston, Texas
• Downstream (marketing, refining, and retail operating) based in Fairfax, Virginia
• Chemical division based in Houston, Texas
Therefore the operating divisions by category are as follows:
Upstream:• ExxonMobil Companies of:
Exploration, Development, Production, Natural Gas and Power Marketing,
• ExxonMobil Companies of:
Refining and Supply, Fuels Marketing, Lubricants & Specialties,
Research and Engineering
• ExxonMobil Chemical Company
Additionally in terms of financial highlights ExxonMobilachieved $404 billion revenue in 2007, which is more than the GDP of Norway. With that incredible revenue ExxonMobil become again before Wal-Mart the leading company in terms of revenue. Furthermore as the following graph shows, revenue has been risen for the last 5 years as have EBITDA and therefore net incomes.
Financial Data USD billions
Consequently, in 2005...