Assignment Question
Instructions: 1) Please apply the PESTEL AND the Five Forces frameworks to ONE of your chosen firms from your previous assignment (“Pick A Firm”). You can switch to a different firm later on, but it must be in the list of the firms you chose in your previous assignment. 2) Please find the grading rubric after the assignment questions. 3) Please follow the writing format below: a) Do not delete questions. Write down your answer below each assignment question. Please do not combine all your answers into one integrated paper. I want to see your answer to each specific question. b) For each question, you should have a structured answer. For example, when you use a framework, please make sure that you have a developed and coherent analysis based on each element. You can start a new paragraph for each element. c) Please provide complete sentences and coherent logic in your answers. Using bullet points alone without explanations or examples is not sufficient. d) The format of your answers should be single-spaced, with normal margins, 12 font size, Times New Roman.Please make sure your format is consistent throughout your answers in the assignment. e) Please use APA format for your citations and references. All the references should be on a separate page. The reference page does not count as part of your answer, but it is required whenever you use any information sources such as a website, book, newspaper, academic paper, magazine, etc. f) Your answers to the two questions together should be at least one page. 4) AI tools are not allowed for any assignment in this course; AI-generated text will be detected by the software. 5) Any type of plagiarism is not acceptable.
Answer
Introduction
This essay will analyze ExxonMobil, one of the three chosen firms, using the PESTEL (Political, Economic, Social, Technological, Environmental, and Legal) framework and the Five Forces framework. ExxonMobil is a global energy company known for its involvement in the exploration, production, refining, and distribution of petroleum products . This analysis aims to provide insights into the external factors impacting the company’s operations and competitive position in the energy industry.
PESTEL Analysis:
Political Factors
ExxonMobil operates in multiple countries, making it susceptible to political influences. It must navigate varying regulations, taxation policies, and geopolitical tensions. Political instability and government interventions can affect its operations and profitability. For instance, changes in environmental regulations may require substantial investments in cleaner technologies (ExxonMobil, 2023).
Economic Factors
Economic conditions significantly impact ExxonMobil’s business. Fluctuations in oil prices, currency exchange rates, and global economic health can directly affect its revenue and profitability. The company also faces the challenge of investing in expensive exploration and production projects amid volatile oil prices (ExxonMobil, 2023).
Social Factors: Societal trends play a role in ExxonMobil’s business decisions. The growing concern for environmental sustainability and the shift towards cleaner energy sources are affecting consumer preferences. ExxonMobil must adapt to these trends by investing in renewable energy and promoting corporate social responsibility to maintain its reputation (ExxonMobil, 2023).
Technological Factors
Technological advancements are reshaping the energy industry. ExxonMobil needs to invest in research and development to improve extraction techniques, enhance energy efficiency, and develop alternative energy sources. Failure to do so could result in a competitive disadvantage (ExxonMobil, 2023).
Environmental Factors
Environmental concerns are increasingly affecting ExxonMobil’s operations. Pressure to reduce carbon emissions and transition to cleaner energy sources poses both challenges and opportunities. The company must invest in eco-friendly technologies and practices to address climate change concerns and regulatory requirements (ExxonMobil, 2023).
Legal Factors
ExxonMobil faces various legal challenges, including environmental lawsuits and regulatory compliance. It needs to navigate complex legal frameworks in different countries, ensuring that it adheres to environmental and safety standards to avoid legal repercussions (ExxonMobil, 2023).
Five Forces Analysis:
Threat of New Entrants
The energy industry has high barriers to entry due to the substantial capital required for exploration, drilling, and infrastructure. Additionally, the industry is heavily regulated, making it difficult for new players to enter. ExxonMobil’s existing scale and resources provide a competitive advantage in this regard (ExxonMobil, 2023).
Bargaining Power of Suppliers
ExxonMobil relies on numerous suppliers for equipment and services. However, it operates at a scale that gives it bargaining power to negotiate favorable terms and ensure a stable supply chain. The presence of alternative suppliers also reduces supplier power (ExxonMobil, 2023).
Bargaining Power of Buyers
Buyers in the energy industry often have limited choices, and their bargaining power is relatively low. Energy is a necessity, and ExxonMobil’s diverse product portfolio ensures it can cater to various customer segments (ExxonMobil, 2023).
Threat of Substitutes
The threat of substitutes in the energy industry is moderate. While renewable energy sources are gaining popularity, they have not entirely replaced fossil fuels. ExxonMobil’s diversification into cleaner energy options allows it to mitigate this threat (ExxonMobil, 2023).
Competitive Rivalry
The energy industry is highly competitive, with several major players like Chevron and Shell. Competitive rivalry is intense, primarily driven by price competition and the pursuit of technological advancements. ExxonMobil’s focus on innovation and operational efficiency is crucial in maintaining its competitive position (ExxonMobil, 2023).
Conclusion:
ExxonMobil operates in a complex and dynamic environment, influenced by various external factors. The PESTEL and Five Forces frameworks help highlight the challenges and opportunities the company faces. To remain competitive and sustainable, ExxonMobil must continue adapting to changing political, economic, social, technological, environmental, and legal factors while leveraging its strengths to mitigate threats in the energy industry .
Reference
ExxonMobil. (2023). About Us.
Frequently Asked Questions (FAQs)
Q1. What is ExxonMobil’s primary business? A1. ExxonMobil is primarily involved in the exploration, production, refining, and distribution of petroleum products. This includes activities such as drilling for oil, refining crude oil into various products, and distributing these products to consumers and businesses (ExxonMobil, 2023).
Q2. How do political factors impact ExxonMobil’s operations? A2. Political factors, such as government regulations and geopolitical tensions, can significantly impact ExxonMobil. For instance, changes in environmental regulations may require the company to invest in cleaner technologies, while political instability in certain regions can affect its operations and profitability (ExxonMobil, 2023).
Q3. How does ExxonMobil address environmental concerns? A3. ExxonMobil has been working to address environmental concerns by investing in eco-friendly technologies and practices. They aim to reduce carbon emissions and transition to cleaner energy sources as part of their commitment to sustainability and environmental responsibility (ExxonMobil, 2023).
Q4. What are the key barriers to entry in the energy industry? A4. The energy industry has high barriers to entry due to the substantial capital required for exploration, drilling, and infrastructure. Additionally, the industry is heavily regulated, making it difficult for new players to enter and compete effectively (ExxonMobil, 2023).
Q5. How does ExxonMobil deal with competitive rivalry in the energy sector? A5. ExxonMobil faces intense competitive rivalry in the energy industry, driven by price competition and technological advancements. To stay competitive, the company focuses on innovation and operational efficiency to maintain its position among major players like Chevron and Shell (ExxonMobil, 2023).
