Strategic Management: External Analysis of Exxon – Assignment Example
Trident MGT499 Strategic Management Strategic Management: External Analysis SLP Strategic Management: External Analysis SLP
i) What are the major threats to the companys ability to serve its stakeholders and make its mission a reality?
One major threat that Exxon Mobil faces is the financial crisis currently faced by the United States and Europe. This crisis means lower demand for their product; thus, it will greatly affect their revenues.
Since the line of business of Exxon largely depends on oil reserves from the Middle Eastern countries, it is adversely affected whenever these countries experience political turmoil. The unstable political conditions in the Middle Eastern countries make it difficult for Exxon to control a large part of their business.
With natural gas becoming more popular and easier to extract with the latest technologies, Exxon may suffer from a decline in profitability because natural gas is cheaper compared to oil (Ananthanarayanan, Bhajiwala, Gandhi, & Bhajiwala, 2011). Furthermore, another threat that Exxon must confront is that of environmental regulations. Today’s growing concern for the environment and climate change has driven governments to closely monitor and regulate the oil industry to ensure that harm is not done on the environment. The public is more concerned now with the greenhouse gas emissions from oil companies; therefore, Exxon takes extra effort to reduce these emissions through increasing energy efficiency and implementing emission-reducing technologies (Exxon Mobil, n.d.).
ii) What are the major opportunities available to improve the companys ability to meet the need and make the vision come about?
Major opportunities are present in the external environment of Exxon. Since oil is still forecasted to be the foremost energy source, this is an opportunity for Exxon. Global energy demand for 2030 is projected by Exxon to be about 35 percent higher than in 2005 (Exxon Mobil, n.d.). Furthermore, there are several barriers to entry in the oil industry such as the huge financial investment that is required for the business, which prevents the entry of competitors.
A growth in the number of vehicles is also good news for Exxon (Ananthanarayanan, Bhajiwala, Gandhi, & Bhajiwala, 2011). This is viewed by the company as a very positive development.
The worldwide acceptance of natural gas as an alternative source of energy is another opportunity that positively impacts Exxon. Since natural gas is more environment-friendly, the demand for the product is forecasted to grow.
iii) What do you perceive you have learnt in Module 2 SLP? Please provide your evaluation of the Module 2 SLP in brief.
One gained several new learnings from Module 2 SLP. One realized the importance of analyzing a company’s external environment because to a large extent it affects the performance of the company. If an organization is able to effectively work around the environment which impinges on it, the company’s profitability will greatly improve. There are times when threats to the companies become opportunities depending on how “creative” an organization works around them. Aside from the internal factors, a company’s strategy is largely dictated by its external environment. The ability of a company to deal with its external environment can make or break it; therefore, it is essential that it identifies the external factors that influence its line of business.
Ananthanarayanan, K., Bhajiwala, P., Gandhi, F., & Bhajiwala, P. (2011). Exxon Mobil: Taking on the worlds toughest energy challenges. Retrieved November 6, 2011, from petrostrategies.org: http://www.petrostrategies.org/Learning_Center/ExxonMobil_CapstonePaper_FINAL.pd f
Exxon Mobil. (n.d.). A view to 2030. Retrieved November 6, 2011, from Exxon Mobil Web site: http://www.exxonmobil.com/Corporate/energy_outlook_view.aspx