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Strategic Management and Business Policy

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Strategic Management and Business Policy

General Description of the company

ExxonMobil is an American multinational oil and gas corporation headquartered in Irving, Texas. It is the world's largest publicly traded oil and gas company and one of the largest companies in the world by revenue (Kim & Kim, 2020). ExxonMobil has operations in over 140 countries and is best known for its exploration, production, refining and marketing of oil and natural gas. It also produces a variety of petrochemicals, including plastics and lubricants.

Political challenges facing ExxonMobil

The current Russia-Ukraine conflict has had a detrimental effect on the business of companies that operate in the region. For example, ExxonMobil, a publicly traded company in the USA, has had to halt its operations in the Black Sea due to economic and political sanctions imposed by the US government in response to the conflict. The company has been forced to shut down its joint venture with Rosneft, a Russian state-owned oil company, due to the sanctions (Villac Filho,2022). The sanctions have also blocked ExxonMobil from entering any new deals with Russian companies and from purchasing any new technology or equipment from Russian sources. ExxonMobil has also seen its operations in Ukraine affected by the conflict. The company has had to delay the development of the Yuzivska field due to the instability in the region. In addition, the company has had to shut down its retail operations in Ukraine, resulting in a loss of revenue for the company.

Current Performance of the company.

ExxonMobil is currently facing significant challenges due to the ongoing conflict in Ukraine and Russia. Despite the effects of a continued weak oil price, ExxonMobil’s financial performance over 2022 was still solid, with a full year revenue of $55.7 billion. However, the geopolitical tension between Russia and Ukraine has put pressure on ExxonMobil’s production and business operations in the region. The company has had to withdraw from several projects in the region, including the Black Sea and the Arctic, due to the sanctions imposed by the US and the European Union. This has resulted in a drop in ExxonMobil’s production of oil and gas, as well as a decline in its number of employees in the region (Zhiznin & Dineva,2022). In addition, ExxonMobil’s investments in Russia have been significantly reduced due to the country’s economic recession. As a result, ExxonMobil’s overall financial performance is likely to be impacted in the long-term, due to the instability caused by the conflict in Ukraine and Russia.

Impending Challenges

i. Geopolitical uncertainty: The situation in Ukraine is unpredictable and could lead to further conflict and disruption in the region. This could make it difficult for ExxonMobil to make long-term plans and investments in the region.

ii. Disruption in access to resources: Access to resources in the region could be disrupted due to the conflict, which would reduce ExxonMobil’s ability to explore and develop new energy sources.

iii. Disruption in energy supply: Any disruption in energy supply from Russia to Europe could affect ExxonMobil’s operations and revenue. This could be due to supply disruptions from Russia, or from European countries that rely heavily on Russian energy imports.

References

Kim, J., & Kim, J. (2020). A Review on the Operation Plan and Future Strategy of an Oil Major: Lessons from ExxonMobil’s.  Journal of the Korean Society of Mineral and Energy Resources Engineers,  57(3), 286-294.

Villac Filho, P. A. (2022). The war of commodities: Russia-Ukraine conflict.

Zhiznin, S., & Dineva, V. (2022). Security of natural gas supply in South East Europe–15 years after the first Russian–Ukrainian natural gas crisis.  Available at SSRN 4070567.