BUS4451-OL Business Strategy and Policy (Dr. Correa)

BUS4451-OL Business Strategy and Policy (Dr. Correa)

External Factor Evaluation Template

SWOT analysis refers to a strategic tool of planning that managers of Exxon Mobil company can use to do an organizational situational analysis. Exxon Mobil company can use this technique to understand the present external factors such as Opportunities and Threats facing the company in its current business environment..

Exxon Mobil company is among leading firms in its industrial sector. Exxon Mobil, through critical analysis and reviewing of Opportunities and Threats through SWOT analysis, can enable it to maintain a dominant position in the market. The analysis of the external factors is an immensely interactive process that requires the managers of different departmental areas within the organization to coordinate the activities of these departments. Some of these departmental areas, which may be evident within Exxon Mobil company, include management of information systems department, marketing department, operations, strategic planning department, and finance department.The framework of SWOT analysis helps Exxon Mobil company to identify external strategic factors, that is, Opportunities and Threats, thus leading to the formation of a SWOT matrix. The SWOT matrix helps the Exxon Mobil company managers to establish various types of strategies such as Weakness-Opportunities strategies, Strengths-Opportunities strategies, Weaknesses-Threats strategies, and Strengths-Threats strategies. In this case, we shall analyze the external factor strategies, that is, Opportunities and Threats strategies. The primary purpose of this analysis of this matrix is to help Exxon Mobil company to identify the strategies that it can integrate into its operations to enable it to thrive in the market place. The analysis of this matrix through the aforementioned strategies help the company to penetrate new markets while protecting the market share in the existing markets.

Some of the Opportunities- External Strategic Factors for Exxon Mobil company include;

1. Lowering inflation rate
2. New environmental policies
3. Increasing LPG demand across the world
4. Free, stable cash flow
5. Decreasing the transportation costs of its products.

The Opportunity of Lowering Inflation Rate

Inflation refers to the decrease in currency value in a country. For instance, in Exxon Mobil company, lowering the inflation rate will create stability in the market and also enable credit to its customers at lower interest rates. This strategy ensures that Exxon Mobil can compete effectively with other competitors in the world.

Through Exxon Mobil SWOT analysis in 2015, the analysis indicated that since 2013 the country’s inflation rate has been increasing at a 1.5% average rate. Therefore, the inflation rate affects the demand as well as the supply of various Exxon Mobil’s products. For instance, an increase in the inflation rate leads to reduced money in circulation, thus leading to decreased demand for Exxon Mobil’s products(Do, 2018). Therefore, for Exxon Mobil to increase the demand and supply of its products, it needs to integrate the opportunity of lowering the inflation rate, which in turn leads to increased money in circulation, thus increasing the demand for its products.

The Opportunity of New Environment Policies

The new opportunities, that is, new environmental policies, create a playing level field for every firm within the industry. Therefore, new environmental policies give Exxon Mobil company an enormous opportunity to drive its advantage home in the new technological environment, thus gaining market share in the new product environment(Van et al., 2002). Therefore, Exxon Mobil company should ensure that it conducts its business activities based on the environmental needs of the people in the area under which it operates. Through this policy, the company is likely to extend its operations, thus improving its market share since it aims at improving the environmental performance.

Increasing LPG Demands Across the World

Exxon Mobil company has a great opportunity to cater to the increased demands of liquefied petroleum gas in most of the developing countries or economies with the inclusion of countries within Asia, South East Asia, the Middle East, and South Asia. Nowadays, LPG has turned to be essential to the olefin equation since the shifting of crackers from naphtha to ethane has given LPG an opportunity to supply more propylene. Less supply of propylene from crackers means increased demand for LPG, thus giving tis company an opportunity to gain more market share in the supply of propylene.

The Opportunity of Free Stable Cash Flow

Free, stable cash flow gives Exxon Mobil Company an opportunity to venture into the adjacent segments of products. With huge amounts of money in its bank accounts, Exxon Mobil company has a great opportunity to venture into new product segments as well as in new technologies(Dahan et al., 2010). This broad investment gives it an opportunity to gain a wider market share in the other product categories.

The Opportunity of Decreasing Transporting Costs of its Products

Lower shipping costs resulting from reduced transportation costs gives Exxon Mobil company an opportunity to reduce the prices of its products. The reduction in the price of its products enables it to pass the benefits to the customers by reducing the prices of its products. Through this opportunity, the company boosts its profits, thus gaining market share through the increased number of its customers.

Some of the Threats- External strategic factors facing Exxon Mobil company include;

1. Lack of regular supply of innovative products
2. Exxon Mobil Company can experience lawsuits in the markets given
3. Exposure to currency fluctuations
4. Changing consumer buying behaviors
5. An increasing trend in America towards isolationism

Lack of Regular Supply of Innovative Products

Over many years, Exxon Mobil company has been developing various products whereby in most times, they are similar products to those developed by the competing players in the industrial field. In addition, there is a lack of regular supply of new products by the company hence contributing to the alternating high and low swings in the number of sales over a long period(Kudrle & Bobrow, 1982). Therefore, Exxon Mobil company needs to ensure a regular supply of innovative products in the market in order to gain and maintain market share in the industry.

The Company Can Experience Lawsuits in the Markets Given

Exxon Mobil company can undergo lawsuits in its various operating markets. There are different and continuous fluctuations of laws based on the product standards in the markets where the company supplies its products. Different markets have different tastes of products and laws determining their favorite products. Thus these fluctuations lead to a lack of unawareness of which products to supply in which market(Schultz & Williamson, 2005). Therefore, for Exxon Mobil company to overcome this threat, it needs to undertake benchmarking in every market to investigate its laws before engaging in selling its products to those markets.

Exposure to Currency Fluctuations

As Exxon Mobil operates in various countries, it experiences enormous currency fluctuations, most probably when operating in a volatile political environment in several markets across the globe. Foreign exchange rates, in most cases, tend to take out some of the company’s profits. When it comes to worldwide selling of Exxon Mobil products, it makes foreign exchange so complicated since this company doesn’t break down foreign exchange losses into segments(Thatte, 2007). Therefore, for this company to overcome this challenge, it needs to segment its losses based on its operating market.

Changing consumer buying behaviors

Consumer’s changing online channel buying behavior could be a great threat to the current infrastructure driven model of chain supply. New trends in the behavior of customers have opened up new markets for Exxon Mobil company, whereby this influences how it can create a new revenue stream as well as on how it can diversify its products.

Increasing Trend in America Towards Isolationism

Increasing trends in isolationism in the economy of the United States can facilitate the equivalent reaction from the government hence impacting the international sales negatively. Increased cases of isolationism in the United States lead to increased losses of profits of the Exxon Mobil company through paying tariffs.

References

Dahan, N. M., Doh, J. P., Oetzel, J., & Yaziji, M. (2010). Corporate-NGO collaboration: Co-creating new business models for developing markets. Long-range planning, 43(2-3), 326-342.https://journals.sagepub.com/doi/abs/10.1177/002224299706100106

Do, A. (2018). ExxonMobil and International Experience.http://csusm-dspace.calstate.edu/handle/10211.3/205481

Kudrle, R. T., & Bobrow, D. B. (1982). US policy toward foreign direct investment. World Politics, 34(3), 353-379.https://www.cambridge.org/core/journals/world-politics/article/us-policy-toward-foreign-direct-investment/D521C5464BA19AC1759835F6F54DF981

Schultz, K., & Williamson, P. (2005). Gaining a competitive advantage in a carbon-constrained world: Strategies for European business. European Management Journal, 23(4), 383-391.https://www.sciencedirect.com/science/article/abs/pii/S0263237305000708

That, A. A. (2007). The competitive advantage of a firm through supply chain responsiveness and SCM practices (Doctoral dissertation, University of Toledo).https://etd.ohiolink.edu/pg_10?0::NO:10:P10_ACCESSION_NUM:toledo1176401773

Van den Hove, S., Le Menestrel, M., & De Bettignies, H. C. (2002). The oil industry and climate change: strategies and ethical dilemmas. Climate Policy, 2(1), 3-18.https://www.tandfonline.com/doi/abs/10.3763/cpol.2002.0202