Free «Corporate-Level Strategies» Essay
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In the world of business today, very many business activities have come up in the various corporate industries. This has been caused by the increased invention of new products and the increase in the world’s population which has increased demand for the various commodities. Therefore, the business entities have come up with various production, selling, and distribution strategies which are meant to help them gain competitive advantage and to achieve their business goals. This write up will address both the business-level and the corporate level strategies of ExxonMobil Corporation and compare them to the ones of Chevron Corporation. It will also discuss about the competitive environment of ExxonMobil and finally compare the progress of the two corporations in both a slow-cycle and fast-cycle market.
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According to Stokes & Rhaphael (2010), ExxonMobil is the world’s largest publicly owned oil and gas manufacturer. It has got its headquarter in Irving Texas-America with branches in almost 200 countries around the globe. The corporation also produces and markets other petrochemical commodities such as olefins, aromatics, and polythene and polypropylene plastics. It was founded in 1998 as a local refiner and distributor of kerosene but today it serves in the oil, natural gas, and the chemical industries. Its success can be attributed to its good business-level strategies and the corporate-level strategies. The business-level strategies are the strategies aimed at gaining competitive advantage. These strategies include the business expansion activities which have been achieved by establishing many branches around the world. This has helped the business increase the sales and manage the competition.
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Stokes & Rhaphael (2010) further state that the corporation has also put in place a favorable pricing strategy on its products by having a reasonably lower profit margin. This is to ensure that the overall prices are affordable to the customers. This in turn increases the level of sales as many customers are able to buy the products ion larger qualities. This has also made the corporation to be preferable to its competitors. The company is also trying by all the means possible so that it reduces the costs of production, selling, and distribution of its commodities. This is also important since it will help the company to maximize its profits above the competitors’ and hence gaining the competitive advantage. Another key business-level strategy employed buy the business is the high quality standard of production. This is by the consistent research into the most effective and efficient production methods. This is also important since most of the consumers in the market normally consider the quality of the products offered to them. Finally, Stokes & Raphael (2010) noted that ExxonMobil has also divided its markets into different segments. This enables the corporation to enhance the different levels of operations in each segment. It is also of advantage to the firm since the potential customers’ needs are properly identified and satisfied in the best means possible.
Considering all these business-level strategies, expansion into the new global markets is the most important for ExxonMobil Corporation to succeed in the long-run. This is because the increased number of customers will automatically motivate the business to increase its scale of operation and to improve the quality of the products and services as per the customers’ requirements. This strategy is therefore the most important since it has to be supported by nearly all the other strategies; therefore making sure that they are also in place (Stokes & Rhaphael, 2010).
On the other hand, the corporation also has some corporate-level strategies in place that are meant to assist in achieving the overall purposes of its existence. The overall purposes include; the satisfaction of the stakeholders’ expectations, maximizing the shareholders’ wealth, and finally fulfilling the mission and the vision statements. These strategies include the acquisition and formation of partnerships with other businesses firms. For instance, the firm formed a partnership with the Qatar petroleum company so as to assist it extract natural oil from their sources in Qatar. This has been very important to the firm since it has managed to expand the business which is in the key interest of all the stakeholders. In order to improve the efficiency of the company, ExxonMobil has also tried to equip its employees with the necessary skills needed for the production processes. It is also observed that most of its employees are engineers and scientists. This is of advantage to the company since it is able to meet its production requirements which are the key matters in achieving the mission and vision (Stokes & Rhaphael, 2010).
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Grant (2009) also notes that the company has also invested into business research in order to discover more investment opportunities. This is of importance since the company stands a better chance of expanding its operations. This has also been facilitated by the continuous savings which the company is making for such opportunities. Additionally, the corporation has devoted its resources to producing a variety of products which include; the chemicals, oil, and gas products. This has assisted the company in expanding its scope of operation and hence maximizing the shareholders wealth. The company also uses the modern technology which is very important in minimizing the cost of production and thus maximizing profits which enables the company’s expansion.
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To further expand and increase the shareholders’ wealth, the company also invests in other businesses outside its industry such as in the stock exchange market. This is by buying of the shares of other business entities and the purchase of the government securities. Finally the company lays an emphasis on achieving its mission and vision by staying focused at the statements (Grant, 2009).
Among these corporate-level strategies of ExxonMobil, the acquisition and formation of partnership with other companies is the most important since it assists the company to expand its operations. It is also important in that the corporation can jointly tackle the market problems with the newly acquired businesses. This therefore helps in maximizing the shareholders’ wealth and the other key purposes of the corporation.
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It is also important to note that the company operates on a very competitive business environment which requires a lot of tactics to survive. This is because of the presence of the substitute producing corporations such as Conoco Philips, Chevron, and Royal Dutch Shell which are also determined to capture the global market. Even though there are only few such businesses, the entities are big and with very many branches which neutralizes the advantages of oligopoly. However, the most significant ExxonMobil’s competitor is the Chevron Corporation. Chevron is also one of the worlds largest energy company in the oil and gas industry with several branches all over the globe. It deals with petroleum products, chemical products, mining, and power generation which includes energy services (Grant, 2009).
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Grant (2009) noted that both the two corporations have a lot of similarities in their business and corporation-levels’ strategies. That is, they all segment their markets, have quality improvement strategies, strive to reduce the cost of production, and also they both do continuous market research as part of their business-level strategies. However, Chevron plays differently when it comes to the pricing strategies. This is because it charges its prices slightly below the market prices of its other competitors in order to entice the consumers and hence gaining a competitive advantage. While ExxonMobil only tries to have a favorable profit margin. Therefore in the long run, Chevron is likely to face financial challenges since it may have insufficient funds to support its activities. However, ExxonMobil in trying to earn enough calculated profits will be successful since it will have sufficient funds to support its expansion activities.
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Similarly, these two great competitors have got various corporate level strategies which are meant to help each of them achieve its corporate goals. Most of these strategies are also identical except that Chevron is not committed to training its employees for more capacity building. Chevron also does not use more of the debt capital to fund its expansion activities; hence denying itself the opportunity to expand its activities fast. In the long run, ExxonMobil Corporation is likely to be more successful since it is more committed to expanding its activities even if it calls for debt capital (Grant, 2009).
My opinion about the success of ExxonMobil over chevron will not differ in the slow-cycle market; a market where there ere very few environmental changes which can affect the operations of a business. This is because in a slow moving market, the many strategies which are formulated will have enough uninterrupted time for implementation. Again, ExxonMobil will succeed since its expansion programs are supported by the additional funds which are borrowed. By depending mostly on the internally generated funds, Chevron will only have its activities running at a slower pace; hence finding it hard to finance its expansion activities. On the other hand, Chevron is likely to be more successful in a fast-cycle market. This is because in a fast-cycle market; where the business environment fluctuates very often, there is need for a business to be able to adapt to any changes. Therefore, Chevron is more likely to adapt to the abrupt changes since it only have few long-tern commitment activities (Hoskisson, 2008).
In conclusion, for a business entity to succeed there must be both the business-level strategies and the corporate level strategies. This can help a firm manage the competition within the industry and thus enabling it to remain relevant. In addition, the strategies can also enable any business to achieve its mission and vision. It is also important for a business firm to expect the environmental changes so that it can plan in advance on how to deal with them whenever they occur. This will ensure that the business remains relevant even during the tough economic times.