Porter’s Five Forces Analysis of ExxonMobil
|Industry||Oil & Gas Operations, Mining and Chemicals|
|Headquarters||Irving, Texas, United States|
|CEOs||Darren W. Woods|
|Revenues||US$413.68 billion , 2022|
|Profit After Tax||US$55,740Billion, 2022 (U.S. GAAP)|
|Competitors||Chevron, Shell, BP Plc|
Oil, gas, and petroleum products are explored for, developed, and distributed by Exxon Mobil Corp. Upstream, Downstream, and Chemical segments make up how it runs. Gas and crude oil are produced in the upstream sector. Petroleum products are manufactured and traded in the downstream industry. Petrochemicals are available in the Chemical sector. John D. Rockefeller started the business, which has its headquarters in Irving, Texas, in the United States. On the Fortune 500, it is now ranked on 6th number.The market capitalisation of Exxon Mobil is greater than that of any other oil and gas producer in the world. The company’s market capitalization was US$410.22 billion as of October 17, 2022.
Porter’s Five Forces Analysis
Porter’s Five Forces Analysis is used to determine the company’s competitive position reference to it’s Industry for better strategizing the companies’ operations for higher profits and less competition, defined by Professor Micheal E. Porter in 1979,at Harvard Business School.
ExxonMobil Rivalry among Existing Competitor
Following are the major competitors and their competitive positiion
ExxonMobil: One of the world’s biggest producers of both oil and gas is it. ExxonMobil’s Upstream sector produces more than 8 billion cubic feet of natural gas and almost 2 million barrels of liquids every day. Natural gas continues to be the most often exploited fossil fuel type for the corporation, despite a net loss of almost 35% since 2011. ExxonMobil’s proven reserves climbed to more than 18 billion barrels of oil-equivalent in 2021.
Its revenue increased significantly from US$208.71 billion in 2001 to US$467.03 billion in 2011, primarily as a result of increased global oil demand and rising oil prices, which moved from an average of US$25.98 per barrel in 2001 to US$98.88 per barrel in 2011 and then onward before dropping to US$39.68 per barrel in 2020, which was the lowest due to a pandemic.
The least profitable year for ExxonMobil after its 1999 merger, if we look at earnings over decades, was 2020. ExxonMobil’s net income dropped to a historic loss of US$22.4 billion, and revenue fell to US$181.50 in 2020. However, these numbers recovered to US$285.64 billion in 2021 and US$413.68 billion in 2022, thanks to improvements in oil prices and margins brought on by recovering demand and tight supply in that year. As of October, the average OPEC oil price for the year 2022 is US$102.97 per barrel. As a result of a lack of energy supplies and sanctions against Russia following the Russia-Ukraine war, this price per barrel has increased from US$69.72 the previous year.
Chevron,Chevron Corp. The portions Upstream and Downstream are how it functions. The Upstream segment consists of the exploration, development, and production of crude oil and natural gas, as well as the liquefaction, transportation, and regasification of liquefied natural gas. It also includes the processing, transportation, storage, and marketing of natural gas as well as a plant that converts gas into liquids. The downstream segment includes the following activities: refining crude oil into petroleum products; marketing of crude oil and refined products; transporting crude oil and refined products via pipeline, marine vessel, motor vehicle, and rail car; and producing and marketing industrial plastics, fuel and lubricant additives, and commodity petrochemicals. The company’s headquarters are in the USA and it was established in 1906.
Thanks to rising oil prices and demand, ts revenue increased steadily to US$244.37 billion in 2011. Oil prices increased from an average of US$25.98 per barrel in 2001 to US$98.88 per barrel in 2011. due to the epidemic, revenue fell to US$110.26 billion in 2016 and US$94.47 billion in 2020 before rising once more to US$155.61 billion in 2021.Chevron experienced some much-needed financial healing in 2021 thanks to a bounce-back in demand for its products and a resulting surge in hydrocarbon prices. For the full year, the oil and gas giant reported profits of US$15.6 billion, compared with a US$5.5 billion loss in 2020;
Over 1.8 million barrels of oil and natural gas liquids were produced daily by Chevron Corporation in 2021. Of this, 858,000 barrels were produced in the United States, the company’s primary market.
Shell Plc: It works to produce natural gas and oil. Integrated Gas, Upstream, Downstream, and Corporate are its operating segments. Liquefied natural gas operations are managed by the Integrated Gas division. The management of crude oil, natural gas, and natural gas liquids exploration and extraction falls under the purview of the upstream segment. The Downstream business unit oversees the trade of oil products and chemicals, which transforms crude oil and other feedstock into a variety of goods that are shipped and sold internationally. The holdings, treasury, and self-insurance segments make up Corporate. The Hague, Netherlands, is home to the company’s headquarters, which was established in February 1907.
Its revenue climbed continuouslyto US$459.60 billion in 2013 and continue to drop to US$311.87 billion in 2017 due to oil price drop as mention above and revenue further decrease to US$183.20 in 2020 due to pandemic and recovered to US$272.66 billion in 2021.
BP Plc: It does business as an integrated oil and gas firm. It functions through the Upstream, Downstream, and Rosneft segments. Exploration for oil and gas, field development and production, midstream transportation, storage, and processing, as well as marketing and trading of natural gas, including liquefied natural gas, power, and natural gas liquids, are all activities that fall under the purview of the upstream segment. The downstream segment processes crude oil, petroleum, petrochemical products, and related services for wholesale and retail consumers. It also advertises, transports, supplies, and trades these products. The Rosneft division carries out investment-related activities. The company’s headquarters are in London, United Kingdom, and it was established by William Knox D’Arcy on April 14, 1909. The business is number 35 on the Fortune 500.
Its revenue climbed to US$379.14 billion in 2013 and continue to drop to US$183.01 billion in 2016 and US$105.20 billion in 2020 and recovered toUS$157.7 billion in 2021.It posted US$8.49 profit in 2021 as compared to loss of US$(20.73) in 2020. Major reason behind revenue movement has been global oil prices and demand.
ExxonMobil Threat of New Entrants
Chances of new entrants in industry very low due to following reasons
- Majority share of market :As they control the majority of the market, Big Oil refers to BP, Chevron, Eni, ExxonMobil, Shell, and TotalEnergies. The Seven Sisters, which have undergone numerous mergers, today make up four of the six Big Oil firms and are among the biggest businesses in the world. Big Oil is not the same as Oil Majors. Heavyweight producers of oil and gas like Saudi Aramco, Gazprom, and Sinopec are examples of state-owned firms that compete with Big Oil.
- Capital Investment: Huge capital investment to enter the industry is greatest barrier in this industry, If we analyze worldwide industries ,Shell total assets are US$404.38 billion in 2021 ranked at number three across all industry after AT&T US$551.67 billion and SoftBank Group Corporation US$413.94 billion at number one and two respectively. Chevron total assets at US$ 239.53 billion in 2021, BP Plc Total assets US$287.27in 2021, Exxon Mobil total assets are US$369.06 billion in 2022.
ExxonMobil Bargaining Power of Suppliers
- Diversificaiton of suppliers:Due to the multiplicity of suppliers, the industry’s supplier’s bargaining strength is limited. Since BP Plc presently collaborates with more than 40,000 diverse and international suppliers in 70 countries.
- Smallof Suppliers: As size of Exxon is very huge in terms of its assets and capacity as compared to its suppliers so suppliers have low bargaining power.Exxon mobil refining capacity at Year end 2021 is 4,567,000 barrel per day.
ExxonMobil Bargaining Power of Buyers
- Control on whole Supply Chain:Bargaining power of customer is very low as companies in this sector has hold on complete supply chain, Exxon Mobil start from exploration, development, production and go till distribution of oil, gas, and petroleum products. So size of its customers very small as compared to Exxon.
ExxonMobil Threat of Substitute Products or Services
- Renewable energy market size:The market for renewable energy is predicted to continue expanding, reaching US$ 2,025.94 billion by 2030. It has the greatest potential to replace conventional oil and gas. The largest renewable diesel factory in Canada will be built thanks to an investment of around $560 million by Imperial Oil Ltd., a majority-owned subsidiary of ExxonMobil. 20,000 barrels of renewable diesel per day are anticipated to be produced by the project at Imperial’s Strathcona Refinery, mostly from locally sourced feedstocks. This is anticipated to contribute to a 3 million metric tonne annual reduction in greenhouse gas emissions from the Canadian transportation industry.
- Electric Vehicle Size: In 2023, it is anticipated that the market for electric vehicles would generate US$457.60 billion in revenue. Revenue is anticipated to expand at a pace of 17.02% per year (CAGR 2023–2027), with a forecasted market size of US$858.00 billion by 2027.
- Progress Toward Net Zero: The operated Permian assets of Exxon Mobil reached a significant milestone in the fourth quarter by attaining zero routine flaring. This is a crucial step in our ongoing efforts to operate our Permian-operated unconventional assets with net-zero Scope 1 and Scope 2 greenhouse gas emissions by 2030. Compared to 2016 levels, the corporation lowered the intensity of methane emissions at all operating assets by more than 40%. With an anticipated start-up in 2027–2028, the integrated ExxonMobil Baytown complex is anticipated to create 1 billion cubic feet of low-carbon hydrogen daily, making it the largest low-carbon hydrogen project in the world. It is anticipated that more than 98%, or roughly 7 million metric tonnes per year, of the associated CO2 produced by the project will be absorbed and permanently stored.
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