One of the world’s biggest publicly traded worldwide oil and gas businesses, Exxon Mobil Corporation, is starting a bold venture into the world of energy trading. ExxonMobil’s strategic strategy has drawn interest and scepticism from knowledgeable market watchers who acknowledge the company’s enormous potential but doubt its willingness to take the necessary risks (Wang et al., 2021). In this review of an article, Devika Krishna Kumar, Kevin Crowley, and Bloomberg provide analytical analysis of the topic “Exxon Mobil is plowing into energy trading and has everything it needs—except the right culture.” In our thorough review of the article, we will look at ExxonMobil’s history, summarize the business case, relate it to concepts covered in class, and offer our findings and conclusions (Wang et al., 2021). ExxonMobil, which was created in 1999 as a result of the union of Exxon Corporation and Mobil Corporation, engages in all areas of the oil and gas sector and has a substantial global presence. The corporation is positioned as a conservative yet highly effective organization thanks to its focus on operational excellence and technical expertise (Wang et al., 2021). However, this new energy trading initiative shifts from ExxonMobil’s established commercial strategy.
Kumar, D.K., Crowley, K. and Bloomberg (2023). Exxon mobil is ploughing into energy trading and has everything it needs except the right culture, Fortune. Available at: https://fortune.com/2023/02/11/exxon-mobil-plowing-into-energy-trading-has-everything-it-needs-except-right-culture/ (Accessed: 25 June 2023).
Section 2: Background Information about Exxon Mobil
One of the world’s largest publicly traded worldwide oil and gas businesses is Exxon Mobil Corporation, also known as ExxonMobil. Exxon Corporation and Mobil Corporation merged to create the business in 1999. ExxonMobil works in all facets of the oil and gas sector, including exploration, production, refining, and marketing, and has its corporate headquarters in Irving, Texas. ExxonMobil has a lengthy history and a significant worldwide footprint. It operates in several areas, including North America, Europe, Asia Pacific, Latin America, Africa, and the Middle East, and has a broad portfolio of properties. The business has sizable upstream operations, conducting exploration and production work in large oil and gas basins worldwide. Additionally, it has a sizable downstream network that consists of chemical facilities, refineries, and a global marketing and distribution network.
ExxonMobil has historically been a conservative and vertically integrated firm focusing on operational excellence and technological knowledge. Maximizing efficiencies, maximizing capital investments, and upholding a sound balance sheet have all been key to its corporate strategy. The company consistently produces solid financial results thanks to its strict approach to cost management and technical developments.
Section 3: Summary of the Business Case
ExxonMobil’s ambitious intention to enter the energy trading market is covered in the article. While the company had previously just dabbled in trade in 2018, it encountered difficulties during the epidemic and suffered losses, unlike its rivals, who saw huge gains (Kumar et al., 2023). On the other hand, ExxonMobil is seeking to reenter the trading industry and use its vast physical assets, market knowledge, and financial resources to compete with established trading firms.
Several elements will determine if ExxonMobil’s entry into the energy trading market is successful. In order to attract top personnel and create a trading culture that supports the dynamic character of the trading sector, the company must show that it is willing to take risks and tolerate potential losses (Kumar et al., 2023). Potential barriers include ExxonMobil’s past hesitation and lack of commitment to trading. On the other hand, its international operations and access to market data provide it with a special advantage that, if used well, might result in significant advantages.
Section 4: Literature Review
Exxon Mobil Corporation, a multinational oil and gas corporation, is entering the energy trading market head-on intending to use its physical assets and financial muscle to take on more established trading companies. ExxonMobil has already vacillated its approach to trading, so industry insiders continue to doubt the company’s dedication to taking risks and tolerating potential losses (Wang et al., 2021). ExxonMobil’s past record raises concerns about its long-term commitment, in contrast to rivals like Glencore, Trafigura, BP, and Shell, who have maintained a steady presence in the trading industry.
ExxonMobil has a distinct advantage in the world of energy trading thanks to its large global activities and access to market data. ExxonMobil has a significant informational advantage thanks to its knowledge of pipeline flows, shipping patterns, and product demand in the energy industry. Nevertheless, using this information to make profitable trades still needs to be easier.
The importance of culture and risk tolerance in ExxonMobil’s quest for success in the energy trading industry is discussed in the article. ExxonMobil has traditionally placed more emphasis on running profitably and constructing low-cost assets than it has on trading commodity prices. To succeed in the dynamic and turbulent trading environment, the corporation may need to modify its risk-averse culture and fear of failure (Wang et al., 2021). Furthermore, recruiting and keeping the best traders is essential, particularly in a cutthroat market where hedge funds are also looking for qualified traders.
The report details ExxonMobil’s prior modest trading efforts in 2018, which failed during the pandemic while competitors saw considerable gains. Recent events, however, show the company’s reaffirmed commitment to growing its trading operations. ExxonMobil hired people outside the company, centralized trading in London, and aspired to produce market-beating trading performance (Wang et al., 2021). To attract and reward trading expertise, the compensation structure, in particular the ratio of base salary to annual bonuses, will be crucial.
Synthesis and Analysis:
Exxon Mobil’s entry into the energy trading market has stirred up doubt and hope inside the sector. The company has a solid basis for growth thanks to its tangible assets, wide global reach, and financial stability. However, there are questions about its capacity to compete with well-established trading companies, given its historical unwillingness to fully embrace trading and take risks (Farida and Setiawan, 2022). The main influences for ExxonMobil’s introduction into the energy trading market will be examined in this analysis, and how they relate to the course material.
Business strategies for competitive advantage are closely tied to ExxonMobil’s expansion plan. By exploiting its global operations and access to market intelligence, the company hopes to take advantage of its distinct position in the energy sector. This aligns with strategic positioning and the firm’s breadth since ExxonMobil aims to stand out from the competition by using its extensive knowledge and resources to conduct successful trading (Farida and Setiawan, 2022). The article draws attention to the fact that ExxonMobil must deal with its cultural risk aversion and a low tolerance for failure to compete effectively.
Corporate strategy is another significant subject, particularly diversification and managing enterprise groupings. ExxonMobil’s entry into the energy trading market is part of the company’s diversification plan. The company wants to reduce risk and exploit market opportunities by expanding its operations beyond conventional oil and gas production (Farida and Setiawan, 2022). The article, however, underlines how ExxonMobil must negotiate the complexity of the trading market, where seasoned players have set up internal processes and statistics that are difficult to replicate.
ExxonMobil’s trading endeavour is covered under the organizational structure and design components discussion. To attract and keep elite talent, the business has taken steps to concentrate traders in London. This emphasizes that organizational design is important in creating a setting that encourages successful trading (Farida and Setiawan, 2022). The challenge for ExxonMobil is to change its risk-averse culture and encourage an attitude of trading among its formerly engineering-focused staff.
The article also emphasizes the importance of strategy execution, particularly concerning corporate culture and leadership. The CEO of ExxonMobil, Darren Woods, has demonstrated a willingness to break with convention by increasing stock awards and staff benefits (Farida and Setiawan 2022). This suggests a change in leadership style and an understanding of the necessity of cultural adaptability to be successful in the trading industry. The piece, however, raises concerns about ExxonMobil’s leadership’s ability to spearhead crucial cultural change and offer the strategic guidance required to succeed in the oil trading industry.
The Article Illustrates the Topic(S) It Relates To
It is possible to study and make connections between ExxonMobil’s foray into the energy trading market and several issues covered in class, such as business strategies, corporate strategies, organizational structure, and strategy execution.
Business Strategies: ExxonMobil’s decision to enter the energy trading market is a reflection of the company’s strategic intent to diversify its revenue sources and seize chances in the erratic energy markets (Farida and Setiawan, 2022). The company wants to strengthen its competitive advantage and increase revenues by utilizing its current physical assets, market knowledge, and financial resources.
Third Sector of Corporate Strategies: Vertical Integration, Outsourcing, and Strategic Alliances With its entry into the energy trading market, ExxonMobil is changing its company strategy (Farida and Setiawan, 2022). The company, which had previously concentrated on vertical integration and internal operations, is now looking to strengthen its trading capabilities by leveraging the experience of outside traders and forming strategic collaborations.
Elements of Organizational Design: Organizational Structure The capacity of ExxonMobil to establish a suitable organizational structure and culture will determine the success of its trading operation (Farida and Setiawan, 2022). The business must create specialist trading teams, implement efficient risk management procedures, and cultivate a trading-oriented culture that fosters creativity, agility, and adaptability.
Corporate Culture and Leadership: ExxonMobil’s entry into the energy trading market requires a change in corporate culture and leadership style. It might be necessary to change the company’s historically risk-averse culture to accept the dynamic and uncertain character of the trading business (Lorenzo et al., 2018). Strong leadership, excellent communication, and the capacity to promote cultural change will be essential for a strategy to be successfully implemented.
Section 5: Findings
Energy trading by ExxonMobil offers opportunities as well as difficulties. The business has many advantages that can provide it with a competitive edge in the trade sector, including its international operations, market knowledge, and financial resources. However, for it to reach its full potential, a cultural transformation, a higher risk tolerance, and the capacity to draw and keep the best trading talent are all necessary (Lorenzo et al., 2018). The ability of ExxonMobil to use its physical assets, global market data, and large network to make wise trading decisions will determine the profitability of its trading business. The business also needs to develop a culture of trading that promotes creativity, adaptability, and a proactive approach to risk management.
Even though the piece emphasizes the possibility of ExxonMobil’s entry into the energy trading market, it also raises questions about its conservative culture and trading history. These elements could make adjusting to the volatile and fast-paced trading environment difficult. By utilizing its vast resources and enormous global reach, ExxonMobil can position itself as a powerful participant in the energy trading industry (Lorenzo et al., 2018). The organization must overcome operational and cultural constraints to leverage its assets and fully traverse the competitive landscape.
In conclusion, ExxonMobil’s ambitious entry into the energy trading market offers the business both chances and challenges. ExxonMobil can establish itself as a dominant force in the trading market by using its vast physical assets, market knowledge, and financial resources. To assure the success of its trade effort, the corporation must, however, traverse several factors. The trading business and ExxonMobil’s overarching company strategy must be strategically aligned. It necessitates a change in the organization’s culture, risk management procedures, and organizational structure. Successful strategy execution depends on strong leadership, clear communication, and a readiness to adopt a more trading-oriented mindset.
ExxonMobil’s entry into the energy trading market is another example of the dynamic sector and how businesses must diversify their revenue sources. ExxonMobil can increase its competitive advantage in the volatile energy markets by diversifying into trading to make more money. To maintain long-term viability, it must carefully strike a balance between taking risks and employing effective risk management techniques. ExxonMobil must regularly assess market conditions, track industry changes, and adjust its strategy as it advances with its trading effort. The organization should use its global presence, market knowledge, and financial stability to take advantage of possibilities and reduce risks in the trading industry.
ExxonMobil’s entry into the energy trading market exemplifies the company’s strategic adaptability and willingness to change in response to shifting market circumstances. ExxonMobil can position itself for success in the cutthroat trading environment by connecting its trading venture to issues covered in class, such as business strategies, corporate strategies, organizational structure, and strategy execution. To maintain its competitive advantage and negotiate the complexity of the trading business, the company must cultivate a trade-oriented culture, encourage risk-taking, and make wise strategic decisions. ExxonMobil has the potential to become a key player in the energy trading industry with the correct strategy and a focus on long-term wealth generation.
Farida, I. and Setiawan, D., 2022. Business Strategies and Competitive Advantage: The Role of Performance and Innovation. Journal of Open Innovation: Technology, Market, and Complexity, 8(3), p.163.https://doi.org/10.3390/joitmc8030163
Kumar, D.K., Crowley, K. and Bloomberg (2023) Exxon mobil is ploughing into energy trading and has everything it needs except the right culture, Fortune. Available at: https://fortune.com/2023/02/11/exxon-mobil-plowing-into-energy-trading-has-everything-it-needs-except-right-culture/ (Accessed: 25 June 2023).
Lorenzo, J.R.F., Rubio, M.T.M. and Garcés, S.A., 2018. The competitive advantage in business, capabilities, and strategy. What general performance factors are found in the Spanish wine industry? Wine Economics and Policy, 7(2), pp.94-108. https://doi.org/10.1016/j.wep.2018.04.001
Wang, C., Brabenec, T., Gao, P. and Tang, Z., 2021. The business strategy, competitive advantage, and financial strategy: a perspective from corporate maturity mismatched investment. Journal of Competitiveness, 13(1), p.164. https://www.cjournal.cz/files/401.pdf