Exxon Mobil Corporation is a multinational oil and gas company that is based in America. It's a descendant at of the Rockefellers standard oil company and it was formed in 1999 from the merger of the Exxon and Mobil companies. It's headquartered in Irving, Texas. The company is one of the world's largest publicly traded companies and has been ranked the number one or number two for the last five years. By the end of the year 2007 the company's reserves stood at 72 million oil equivalent barrels while its production rates were expected to last for more than 14 years (Hrebiniak & William, 1984).
The company has 37 oil refineries in more than 21 countries constituting a combined daily refinery of approximately 66.3 million barrels. Exxon Mobil is recognized as the world's largest refineries and this title has been associated with the former standard oil since the in corporation in the 1870s. In addition to that the company is largest of the six recognized oil super majors. Exxon Mobil owns hundreds of other similar subsidiaries including the imperial oil limited in Canada and the sea river maritime which is a petroleum shipping company. Functionally the company is organized into several global operating categories including the upstream, down stream, chemical Exxon Mobil global services company, XTO and finally the imperial oil (Neil,1974).
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Many organizations experiences a lot of stresses as well as difficulty when it comes to coping with change and lack of innovation especially from within the organization has been recognized as one of the critical problems that most of the modern businesses face in the United States and Canada. Therefore to be successful in the competitive business world these organizations have fewer options than to embrace to these diverse inevitable changes. Most companies have in the past been used to illustrate success that comes with embracing organizational change as a strategic measure (Holmstrom, &. Kaplan, 2001).
Some of them include the Hewlett Packard, general electric and the Motorola.
When it comes to describing organization changes it mainly focuses on different examples ranging from franchising, partnerships, mergers and acquisition and joint ventures which usually vary when it comes to its outlook, method of initiation, method of implementation and on its goals. Generally organizational strategic changes involve two components which are planning and analysis processes which are studied in details through a keen look at the porters five forces model as well as careful analysis of various environments that are critical before implementing nay organizational change. This paper will therefore critically appraise the utility of strategic plans in the effecting of the strategic change in the Exxon Mobil Corporation (Drucker, 1995).
Critical appraisal of change in the Exxon Mobil Corporation
Organizational change is often defined as the process of an organization adopting a new idea or behavior. In order for organizations to survive and prosper in this highly complex world, they must continuously adapt to new situations and move in line with the developing trend of learning organizations which are able to engage each an everyone of tits employees in its process of solving problems as well as foster its improvement based in lessons gained from experience (Glueck, 1980).
Before undergoing any organization change plans to carryout an analysis regarding the company's reading its legal political environments and socio-economic environments. the economic environments focuses on the economic conditions in the countries where the organizations are operation al and focus on factors like infrastructure, economic development, products markets ,resource ,interest rates, ,inflation, exchange rates and economic growth. The socio-economic environment concerns with the core values including uncertainty, however distance, collectivism, individualism and masculinity or femininity while the social values serve to influence organizational functioning as well as management style (Hax, 1988).
All the stated factors have to be considered if any organization change has to be initiated and implemented successfully. in addition to that some concerns have to be satisfied before adopting any organization change for instance the players in carrying out, the evaluation of the effects of the changes in both the strategy and structure of the performance of the organization. Measurement of the effects of the organization changes strategy is conducted using indices like stock market price or even market share.
Exxon Mobil and Strategic Change
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By 1999, the Mobil chemical company which was established in 1960 was a great name in the oil industry with its principal products including basic olefins and aromatics, polythenes and ethylene glycol. The company basically produced lube additives as well as synthetic lube base, catalysts and propylene packaging films and thus enjoyed the benefits of manufacturing in more than ten countries (Hax, & Majluf, 1996).
The Exxon chemical company in 1965 became a world's wide organization and by 1999 it was it was market of its major products like the polythene and aromatics. In addition t tat the company also had added specialty in production of plasticizers, elastomers , solvents and process fluids. The Exxon and Mobil in 1999 merged to combine three operations to become Exxon Mobil corporation a strategy which its top management targeted to achieve various goals including combining their us based businesses into the largest non governmental oil company in the world, ensure that the expectations of the merger in terms of near term cost savings as well as the long term strategic benefits exceeds their previous values, improved competitive levels with other multinational oil companies as well as the state owned oil companies that are expanding rapidly outside their areas of origin (Robert,1993).
The merger between the Exxon and the Mobil was one of the uses of its strategic plans to affect a change in the company that will eventually lead to increased benefits and improved performance of the business operations. The plan to merge both companies was a strategic change in that it had its business strategies at the root of change which it wanted to enter new markets as well as foster its expansion of the six of its operations which are the basics characteristics of an organizational strategic change. This further evident in that the company management had conducted an initial through analysis of the oil industry's competitive forces and even came up with two main factors of the merger which were the need to reduce the costs of its products considering the face of the low prices and the changes witnessed in the oil industry. In addition to that the effect of the organizational change was fostered by the growth experienced by the state owned oil companies as well as the emerging low cost independent marketers and refiners in the United States markets (Hill, & Charles,1995).
Exxon Mobil has strategic plans that had reduced is costs by more than 4 billion dollars and had to effect the strategic change of merging the companies to make the achievement of its future as goals much easier. Therefore the effecting of the strategic changes was one of the ways in which the company would use to reduce it costs as mergers are generally considered as effective ways of doing so especially when considering the act that the new resources that these merger companies shares goes greater way to cutting significant costs.
In addition to that the plans of Exxon Mobil merging has made the company to be the world class undisputed leader in its business enterprises and thus has strengthened its technological leadership thus coupled wit its two century experiences in the industry and its operations in more than 200 countries has definitely made it redefine the meaning of efficiency and world class scale when t comes to the oil industry. Thus the plan to merge has helped the company to effect its strategic change (Roeber,1994).
The plans of Exxon Mobil to expand its business operations was another trademark of effecting its organizational strategic changes the company required to acquire a broader portfolio of opportunities in the high growth markets, attractive upstream areas as well as the business in the world at large. This strategic plan has therefore enabled it to optimize its choices to further improvement of its returns hence an efficient strategic change for its businesses to execute plans in capturing the targeted opportunities.
Another way in which the strategic plans of Exxon Mobil has helped the company to effect its organizational change is the ability to effectively maintain its leadership position in the core business as the most efficient competitor in almost every aspect of its business. This has facilitated capturing of the quality investment opportunities which as being able to maintain a selective as well as disciplined approach, a high quality portfolio of its productive assets, development and employment of the best technology, ensuring of a safe as well as environmentally sound operations and finally being able to continuously improve its already high quality workforce in highly performing organization while maintaining a strong financial position and proper use of its financial resources. Therefore the company has been able to initiate and implement its gradual strategic change successfully over time (Davidson, 1995).
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Exxon Mobil cooperation has used its strategic plans to maintain an investment discipline in terms of maintenance of high investment standards as well as adhering to fundamental strategies to produce along term returns. The company has also been able to maintain a stable investment profile through out it business cycle which has minimized in efficiencies (David, 1995). In addition to that it has also been keen in testing its potential investments covering a vast range of economic scenarios thus acting only on those capable of providing resilient returns. In implementing this strategic plan the cooperation has been able to successfully effect its strategic change (D'Aveni, 1994). Also the effective plans of Exxon Mobil to mange its assets through employment of a disciplined review process have ensure that all of its assets contribute to the company's financial and strategic objectives (Daft, 1997).
These plans enable the management to focus on improving the performance of its existing assets by reducing the costs while at same time enhancing its productivity. These plans strategic plans has seen the company through changing business conditions as some assets become candidates for divestment and high grading while those which are no longer or worth less than others are considered of disinvestment as well hence the successful initiation implementation of its strategic organizational change (Byrne, 1996).
Another strategic plan utilized by Exxon Mobil in effecting its strategic change is the ability of the company to merge the two companies while staying focused on its original business objectives of being unique and easily differentiated from competition. This included having leadership positions in all of its core businesses and technology demanding a flawless execution in the company's base operations and rigorous discipline in the process of project implementation. Through combination of the stated priorities coupled with an efficient financial and corporate structure the company has been in a good position to produce superior business results as well as strong returns to its shareholder thus successfully adopting its strategic change (Quinn,1980).
Prior to the merger the company was able to take strategic decisions which facilitated avoidance of possible pitfalls through effective and accurate forecasting which ensured successful completion of the company's mainstream and chemical projects, selectivity/efficiency benefits in exploration options and lowered lease bonuses. The effectiveness of these company's strategic plans help the effecting of the strategic changes during the period of merger (Renato & Grant, 1992).
Exxon Mobil also implemented its strategic planning through initial development of its comprehensive inventory management of its long term projections and upstream development projects long way before the merger was actualized. These initial strategic has effected the successful initiation and implementation of the organizations strategic change in that the development plans that had been put forward with the natural gas production, liquid and merger predicted that the production was to grow by three percent through the year 2005. Ina addition to that these plans had also predicted the new coverage of new geographical markets and key growth areas as well as an increase and continuous growth beyond 2005 given the new numerous developments projects that were in the current design and planning stage Steiner, 1979).
Strategic plans has also en utilized by Exxon Mobil in implementing some of its strategic organization change was through implementation of it plans to improve the company's returns through the self help initiatives as well as profitable growth through the focusing on the marketing programs and customer focused strategies which were targeted at making the Exxon Mobil the true leader in the industry (Mitchell& Mulherin, 1996).These plans therefore facilitated the company to successfully implement its organizational strategic changes. In addition to that there was a strategic change considering the fact that both companies involved in the merger were distinguishable in their own right and just planned to change their organizational strategically to become high and stronger force in the very competitive industry. Through this they were able to achieve through the utilization of their long standing core strength which is their technology which has differentiated them from the competition hence the complementary strategic of the technology used by both companies has enabled them to progress through the organizational changes through the merger successful (Mintzberg, 1994).
Anther plans that the Exxon Mobil utilized in implementing its strategic changes is the corporate strategy which includes organizing of its business along two dimensions that is on market share and business growth rate which is increasing as it pertains to the rapid increase in the entire industry (Porter,1980). Therefore the successful implementation of the pans of both companies ensured that they successfully under go the organization change as the combination of both the high and allow market share and business got provided several categories for a corporate portfolio hence making the companies able to add star into their business units thus creating a visibility, attraction and hence generating profits and positive cash flows even during the maturity of the industry and slowing of the market growth (Pare, 1994).
The plans of merging and restructuring of the company reflected the strategic changes in the organization as a result of shocks that include technological changes, intensification of rooms as well as sources of competition that lead to deregulation in the major industries, globalization of market and the changing f the financial market dynamics that characterized the business world of the time between 1994 and 2000. Therefore such plans fostered successful changes in the organization (Porter,1985).
The action of Exxon Mobil regarding outlook on energy for instance the public document that is used by the company to help in forecasting of both the middle and the long term apply as well as the demand for energy serves a for the purpose of its strategic planning. This has enabled the company to be in good position especially to adopting of alternative sources of energy as a counter measure to the impending shortage of fossil fuels. Tin doing this the company's strategic planning has helped in the effecting of its organizational change as the company has continued to focus on the next decreased especially on issues concerning extraction and refining of oil and gas. In addition to tat the company's strategic plan to sustainably respond to the increasing demands of energy and increasing availability of alternative sources of energy helps the company to invest in areas of low decreasing demand for fossil energy hence could successfully implement the organizational changes with ease (Porter,1996).
The company's strategic plans like analysis of past data and accurate and reliable forecasts ahs made the company more confident that it will be able to manage any organization changes that any arise as the speculations of exhaustion of fossil fuels persists (Breslow, 1998). From its planning the company can sustainably fit to the changing demands and utilization of the products tat the company is offering thus remains profitable even in rapidly and constantly changing world of business. The adoption of new approaches by the company is as a result of its effective strategic plans. The plans to counter shortage of the fossil fuels are the increased and advanced technology and technical expertise that facilitates extraction of oil from ground places where it was not possible in the previous years Berkovitch & Narayanan, 1993).
The Exxon Mobil Company strategically plane the recruitment of eighty new graduates in which more than half of them have a technical background while others have education background relating to economics. In ensuring that this plan is effectively executed the company is able to implement its strategic change as these employees are able to fit in the company cooperate culture with ease hence effecting any organization change is possible and hence increasing chances of success in its implementation process (Courtland & Dovel, 2000).
At Exxon Mobil everything done is based on figures and facts hence ensuring that everything done is sustainable and nothing done on strict terms hence the company is able to take a conservative approach. This is achieved through keen look at the company's analytical skills which its long term investments depends on thus such strategic plan has foster the implementation of the organization change through years (Andrade, & Stafford, 2001).
The company also strategic plans that ensures that the company relies on networks in its operations hence whatever an member of staff develops whether new or ingenious as long as it promotes a faster and efficient operations it is then circulated to all other parts of thus promoting learning from each other. This strategy has utilized the benefits of group work hence has helped the company effect it strategies to dealing with organizational changes. In addition to that at Exxon Mobil the management has strategic plane that has a primary control of peoples direction when it comes to their careers in tat there are plane that ensures that their a rigorous career planning which is very organized and reflected in the annual job rotation and performance reviews which guarantees that no staff member escapes. Such strategic plans make individuals to achieve their potentials and develop personally and hence the company has been able to use such employee plans to foster a strategic change in the organization (Adamson & Marks, 2001).Finally the company has strategic plans for almost each an operation it undertakes this has utilized them fully in ensuring that the organization successfully survive the turbulent and inconstant business environment through the decades.