CASE ANALYSIS OF EXXON MOBIL

BUSINESS GOVERNMENT AND SOCIETY

BGS field is very important for managers to succeed in meeting its objectives a business must be responsive to both its economic and its non economic environment. Recognizing that a company operates not only within markets but within a society is critical. A basic agreement or social contract exists between the business institution and society. Managers must respect and adhere to society’s expectations. This contract defines the broad duties that business must perform to retain society’s support, but these duties are often ambiguous.

BUSINESS: A broad term encompassing a range of actions and institutions and the main purpose of business is to satisfy human needs by product and services.

GOVERNMENT: Structures and processes in society that authoritatively make and carry out policies and rules.

SOCIETY: A network of human relations that includes three interacting elements: ideas, institutions and material things.

                

CASE SUMMARY

The case is about the ExonMobil Corporation which descended from the Standard Oil Trust of  New Jersey. It was founded by John D. Rockfeller and its main business is discovering, producing and selling oil and natural gas. It once had 90% share of the American oil market. But in 1890 the Congress passed the Sherman Antitrust Act to outlaw its monopoly. 1911 the trust is broken into 39 separate companies

John D. Rockefeller (Standard Oil) was a brilliant strategist and organizer who crushed competitors, emphasized cost control, efficiency, centralized organization, and suppression of competitors Although Rockefeller’s influence is buried in the passage of time, ExxonMobil’s actions remain consistent with his nature.

 It was in 1972 that the Standard Oil Trust changed its name to Exxon, and in 1999 merged with Mobil, to form ExxonMobil.

Thus ExonMobil still remains a force to reckon with but its power is largely limited by economic and political forces. It now controls only 5.6% of oil production and holds less than 1% of petroleum reserves, far less than it did in the 1950s. It has complex relationship with powerful governments.  ExxonMobil’s large size attracts the watchful eye of environmental, civil rights, labor, and consumer groups. Thus, it engages in corporate citizenship by funding a variety of programs to benefit education, communities, health, nature, and the arts.

Its story rightly illustrates the importance of interactions between one large corporation, government and society.

THE QUESTIONABLE ACTION:

·        1989 – Intoxicated captain of the Exxon Valdez spilled 11 million gallons of oil into Alaskan waters.

·        1997 – Lee Raymond rejected the scientific case for global warming and refused to have the company look into renewable energy sources.

·        1999 – Exxon merged with Mobil and revoked Mobil’s policy of domestic partner benefits.

·        2001 – ExxonMobil turned a deaf ear to the complaints of villagers in Aceh, Indonesia who suffered violence at the hands of the company guards.

ANALYSIS AND SUGGESTION:

As a business entity, we can see that ExxonMobil main motive was to be profitable. Cost control, capital productivity and strict financial controls are emphasized in operations. Profit is an overriding goal, and projects must meet strict criteria for return on investment and the business is competitive. To maintain profitability the company pursues new reserve whenever they are located, taking political risks and abiding unrest and corruption. In Chad, Angola, Nigeria and Equatorial Guinea, it paid dictators for access to oil.

The company shows both ethical and unethical practices like it funds worldwide programs to benefit education, communities, health, nature and the arts. It also has a save tiger campaign and it sponsors free poetry reading in Singapore, but it is unethical in many way like Intoxicated captain of the Exxon Valdez spilled 11 million gallons of oil into Alaskan waters, which is spoiling the nature and Lee Raymond rejected the scientific case for global warming and refused to have the company look into renewable energy sources. ExxonMobil turned a deaf ear to complaints of villagers in Aceh, Indonesia who suffered violence at the hands of the company guards. So the business is not doing any good to the society and at the same time polluting the environment, its only own profit and nothing else.

Therefore ExxonMobil should have basic duties and responsibilities that must retain public support, should understand the society and not hurt the environment. It must be reflected in laws and regulation.