Business Level Strategy: Exxon's Business Level Strategy
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Business level strategy
Exxon focuses on its core competencies—strong R&D platform, vertical integration, product diversification, economies of scale, and operations excellence— to satisfy various consumer needs and achieves high value for its shareholders. Exxon achieves this through Business-level strategies. These Business-level strategies enable Exxon to provide value to customers and gain a competitive advantage by exploiting core competencies in all the aspects of Oil & Gas value chain ranging from crude oil and natural gas production to refining the oil and gas, transportation, marketing of petroleum products, and trading of products. Exxon is also a major player in conversion of hydrocarbons into petrochemical commodities and finally…show more content… Similar to upstream operations, Exxon engages cost leadership strategy in the downstream and chemical operations. Exxon’s core competencies in this market segment: operations excellence, integration across various businesses (Refining and Chemical manufacturing), and leading-edge technology gives it a low-cost position by creating economies of scale and access to unique…show more content… In the Chemical Industry, the 10-year (2006-2015) average earnings and the ROCE are highest for Exxon (Appendix-III). The growth in global demand for refined products coupled with lower commodity prices resulted in 50% increase in the 2015 downstream and chemical earnings from $7.36 billion (in 2014) to $10.9 billion (in 2015). The competitors also saw increase in the downstream and chemical earnings with Shell ($10.2 Billion), Chevron ($7.6 billion), BP ($7.5 billion), and TOTAL ($4.8 Billion); however, Exxon earnings for 2015 are the highest among the competitors.
The integration between refining and chemicals provides an unequaled advantage and this is statement is corroborated by the fact that the 10 year-average earnings for Exxon are greater that Dow earnings (Appendix III) albeit Dow’s core-competency is in running the petrochemical plants. As a result, Exxon delivers wider margins and higher returns than peers' despite a similar business model designed to capture the rents involved in hydrocarbon production and processing irrespective of commodity