Explore the dynamic forces influencing the oil industry in our comprehensive ExxonMobil PESTLE analysis, with a focus on key external factors.
Have you ever imagined how our life would have been if no oil-producing or transportation companies existed? We definitely wouldn't be driving cars at this moment.
One of the major players in the oil and gas industry is ExxonMobil. It is America's one of the most significant companies that transports, produces, and refines oil.
ExxonMobil began after the breakup of the biggest American company in the oil and gas industry, Standard Oil, in 1911.
Currently, ExxonMobil has a significant presence in the market. Moreover, it is expanding rapidly, so we have decided to conduct an ExxonMobil PESTLE Analysis to see what external factors impact the operations of ExxonMobil.
Before proceeding further and conducting the PESTLE analysis, we should look at the history of ExxonMobil.
ExxonMobil's history can be traced back to 1870 when the biggest American oil and gas company, Standard Oil, came into existence. Standard Oil kept on expanding its operations.
However, in 1911 the company was broken into 34 small companies after it was declared violating the Antitrust Act. One of the 34 companies that came into existence after Standard Oil's breakup was Standard Oil of New York, which later became Socony.
In 1931, Socony merged with Vacuum-oil to form Socony-Vacuum. The company kept operating in the oil and gas industry. Later, in 1955, it rebranded itself as Mobil. Mobil kept increasing its customer base by providing quality products.
On the other hand, Exxon emerged as one of the biggest companies in the oil and gas industry. In 1999, both top companies in the oil and gas industry decided to merge. This merger was the biggest merger ever. The merger was completed in 1999 to form ExxonMobil Corporation.
ExxonMobil conducted various operations, from exploring, producing, refining, and marketing petroleum products. Over the years, ExxonMobil expanded and increased its market share.
Besides that, ExxonMobil also focused on other projects that were a part of its social corporate responsibility. For example, ExxonMobil launched a teacher's academy to motivate and guide young kids to pursue their careers in Maths and Science.
In 2007, ExxonMobil drilled more than 7 miles, the deepest worldwide. No other company in the oil and gas company had drilled so deep.
ExxonMobil produces several petroleum products. During COVID-19, it also started producing isopropyl alcohol used in hand sanitisers. ExxonMobil is one of the biggest global oil and gas companies.
In 2022, the company managed to generate revenue of $413.7 billion. ExxonMobil operates in more than 60 countries. It is a huge source of employment globally since it employs 62,000 employees.
After discussing the operations of ExxonMobil in detail, let's proceed further and conduct the PESTLE analysis of ExxonMobil. However, before we proceed, knowing what PESTLE analysis is is important.
PESTLE analysis is a tool used by businesses across the globe to highlight how various external factors impact the operations of a business. The PESTLE analysis framework helps us to identify how different political, social, economic, technological, legal, and environmental factors impact a business.
Now that we have discussed PESTLE analysis, let's examine how different political factors impact ExxonMobil.
Political Factors That Affect ExxonMobil
Political factors account for the political environment and government policies that impact a business. ExxonMobil is one of the biggest companies in the oil and gas industry. Let's discuss how various economic factors impact ExxonMobil.
ExxonMobil operates in different parts of the world. Hence, it is sensitive to global conflicts. For example, ExxonMobil used to operate in Russia. It was making huge profits from that region. However, as the conflict between Russia and Ukraine began, ExxonMobil wrapped its operations from Russia and left.
Similarly, changes in governments impact ExxonMobil negatively. ExxonMobil requires a lot of permits to carry out its operations in any part of the world.
However, whenever the government changes in any region where ExxonMobil operates, there is a high chance that the new government might cancel the permits of ExxonMobil or they might change the terms and conditions of the contract.
Furthermore, government policies regarding imports and exports impact ExxonMobil significantly. Since ExxonMobil is a significant company that transports oil, in the case of strict export and import policies, the business of ExxonMobil gets impacted negatively.
Other than that, government support has a great impact on the operations of ExxonMobil. Suppose the government provides subsidies to the companies operating in the oil and gas industry. In that case, ExxonMobil will expand its operations and make more profits. Hence, support from the government impacts ExxonMobil positively.
Economic Factors That Affect ExxonMobil
Economic factors are the domestic and international economic conditions that impact the operations of a business. In this section of the PESTLE analysis, we will examine how different economic factors impact ExxonMobil.
Inflation is a significant macroeconomic variable. A high inflation rate means commodity prices have increased rapidly compared to the previous year. High inflation impacts ExxonMobil significantly.
Due to high inflation, the price of an oil barrel increases rapidly. As a result, the revenue of ExxonMobil increased. However, besides the revenue, the operational costs of ExxonMobil also increase.
Besides that, the interest rate has a significant impact on the operations of ExxonMobil. Suppose ExxonMobil is operating in an economy where there is a high interest rate. In that case, it will become difficult for ExxonMobil to take loans from the bank, so the company won't be able to invest in capital.
On the other hand, if the interest rates are low., it will be easy for ExxonMobil to take bank loans. Hence, in economies with low interest rates, ExxonMobil can take loans and invest in capital.
Other than that, global economic conditions also impact the operations of ExxonMobil. If the global economy grows rapidly, ExxonMobil will make huge profits. On the contrary, if the global economy shuts down as it did during COVID-19, the oil demand will fall, and ExxonMobil will experience losses.
Social Factors That Affect ExxonMobil
Social factors are the factors that represent the social and cultural values of a society. In this section, we will examine how different social factors impact ExxonMobil.
People are becoming aware of how oil refineries and oil transporting companies contribute to pollution. As a result, people are now protesting against the oil-producing companies. They demand that companies ensure that they minimize their contribution to pollution.
These protests impact ExxonMobil negatively since the image of ExxonMobil gets damaged. Moreover, consumer preference also impacts ExxonMobil significantly. Earlier, people used to buy vehicles that required fuel to function.
However, as electric cars have entered the market, people are now buying electric cars. This shift towards electric cars is causing the demand for fuel to fall, due to which the sales of ExxonMobil will fall, too.
Other than that, people demand big corporations to participate in social causes and help solve social issues. ExxonMobil is aware of that, contributing to projects that benefit the local society. This helps ExxonMobil create a positive image of Exxonmobile in people's eyes.
Besides that, as people have become aware of diversity, they demand big corporations like ExxonMobil to recruit people from different ethnicities. ExxonMobil has to ensure its diverse workforce. Otherwise, it can be labeled as a racist organization.
Technological Factors That Affect ExxonMobil
Technological factors are the factors that are related to technology and innovation. This section of the PESTLE analysis will discuss how different technological factors impact ExxonMobil.
Due to the expansion of the internet, plenty of platforms have emerged that facilitate the interaction of employees and employers. Due to their existence, ExxonMobil can now hunt the best workers and recruit them in its workforce. By doing so, ExxonMobil will excel and get ahead of its competitors.
Besides that, advanced exploring and drilling techniques have emerged. By using these techniques, ExxonMobil can access untapped oil and gas reserves. Moreover, these technologies have made it easier to extract hydrocarbons more efficiently.
Other than that, ExxonMobil can use data analytics, machine learning, and AI tools to improve decision-making. Moreover, using the latest data analytics tools, ExxonMobil can forecast its sales in the coming months.
Furthermore, ExxonMobil is criticized for emitting carbon. ExxonMobil can use the latest technologies in its refineries to capture carbon. Moreover, it can install catalytic converters in its refineries to prevent carbon emissions.
Moreover, digitization can improve the operations of ExxonMobil. The company can adopt tracking systems, which can help in optimizing operational efficiency. Similar software can help ExxonMobil in keeping track of its inventory.
Legal Factors That Affect ExxonMobil
Legal factors are linked with the legal framework and laws of the country where a business operates. In this section, we will examine what legal factors impact ExxonMobil.
ExxonMobil has a large workforce of 60,000 employees. The company has to ensure no discrimination occurs against the employees. Moreover, it has to ensure that employees are recruited based on merit, not gender. If ExxonMobil fails to comply with the labor laws, the company might face heavy fines.
Moreover, ExxonMobil has to be careful while dealing with its customer data. Suppose the data of ExxonMobil's customers gets leaked. In that case, the brand will suffer since its reputation will get hurt, and it'll have to pay heavy fines.
Besides that, ExxonMobil has to abide by the environmental regulations set by every country where the company operates. In case ExxonMobil fails to operate according to environmental regulations, the operations of ExxonMobil might get suspended in that particular country.
Furthermore, there are laws related to product quality that impacts ExxonMobil. Since ExxonMobil deals with oil and gas, it should significantly follow the quality assurance laws. Law enforcement agencies closely monitor the companies that operate in the oil and gas industry.
If ExxonMobil fails to comply with the quality assurance laws, the company might have to close its operations. This will impact the reputation of ExxonMobil, and it will also make the company suffer financially.
Environmental Factors That Affect ExxonMobil
Environmental factors are the factors that are related to the environment. In this section, we will look at how different environmental factors impact ExxonMobil.
As global warming occurs, people and governments are getting more concerned about carbon emissions. People are demanding that governments should regulate companies that are emitting carbon.
ExxonMobil is involved in the process of refining in which carbon emissions take place. Pressure groups are demanding ExxonMobil minimize carbon emissions. Governments might impose penalties on ExxonMobil if the pressure groups can build enough pressure.
As environmental changes are occurring, the water tables are dropping. However, companies that operate in the oil and gas industry require excess water for the refining and drilling process.
Water scarcity can impact ExxonMobil's operations significantly. It can cause delays in the operations of ExxonMobil. Moreover, it can also increase the operational cost of ExxonMobil.
Other than that, natural calamities are increasing with every passing year. Sea storms make it difficult for ExxonMobil to transport oil through the sea. As a result, delays occur.
Furthermore, storms destroy roads and bridges, due to which trucks of ExxonMobil that are transporting oil get stuck on the road. Hence, delays occur, and the supply chain gets disrupted.
ExxonMobil PESTLE Analysis: Final Word
ExxonMobil Is one of the biggest companies in the oil and gas industry. It operates in more than 60 countries and six continents. The company has links with Standard Oil, the biggest oil and gas company in the US.
ExxonMobil emerged after two giants of the oil and gas industry, Exxon and Mobil, merged. This merger was the biggest merger ever. Over the years, ExxonMobil kept on expanding its operations.
Besides that, the oil and gas company also participated in social work since it believes in doing well for society.
After discussing the history of ExxonMobil, we proceeded and conducted the PEST analysis of ExxonMobil. This PESTLE analysis helped us highlight how different external factors impact the operations of ExxonMobil.
If you liked reading this article and are curious to know more about PESTLE analysis, look at more examples of PESTLE analysis here.
