Question

Analyze the competitive structure of the upstream segment for ExxonMobil within its value system in equilibrium

                A. Power of Buyers

1. Identify the buyers.

2. How do buyers impact the ability to set and maintain high volume and high prices?

                B. Power of Suppliers

1. Identify the suppliers.

2. How do suppliers impact the ability to set and maintain low costs?

C. Degree of Rivalry

1. Do active competitors impact the ability to maintain high sales?

2. Do active competitors impact the ability to maintain low costs?

D. Threat of Entry

1. Are there any threatening entrants? How serious is the threat?

2. How would entry change the degree of rivalry?

                E. Threat of Substitution

1. Are there any threatening substitutes? How serious is the threat?

2. How would substitution change relationships with buyers?

Answer 1

The analysis of competitive structure of the upstream segment for ExxonMobil within its value system in equilibrium is as follows:

A. Power of Buyers

1. The buyers are as follows- Refineries, national oil companies, International oil companies, Distribution companies, Traders etc.

2. The looks for the high-quality product. They also look for the price. But the buyers are less here. So, the price of the product is high.

B. Power of Suppliers

1. The suppliers are as follows- Machinery companies, International oil companies, Oil rich countries, government etc.

2. Due to the suppliers business involvement they impact the ability to set and maintain low costs.

C. Degree of Rivalry

1. Yes, the active competitors impact the ability to maintain high sales because it creates the competitive environment. This competitive environment maintains the company strategy towards the business which changes time to time hence generate more sales.

2. When the competitors are more in the market then some of them go for the low price in the market. Yes, active competitors impact the ability to maintain low costs but it happens for some period of time. This is because the price are volatile in nature.

D. Threat of Entry

1. Yes, there are threatening entrants such as capital requirements, Economies of scale, Government regulations, expected retaliation, lower pricing strategy, reducing cost etc. These threats are more serious because the capital requirement is more in the case of this industry. If the pricing is lower than the revenue generated would not be much.

2. When the new entrant enters into the market, the competition level increased in the market. The strategy used by new entries may be more effective than the existing players. The degree of rivalry changes with the number of effective entrants into the market. This is because of pressure on the players is increased.

E. Threat of Substitution

1. The threat to substitute are Nuclear energy, Coal, Hydrogen, biofuels and other renewable sources as solar and wind energy. Yes, they any threatening substitutes. These threats are also more serious ones because the cost associated with them are less than the oil and gas industry. Some of them are less polluted sources.

2. The substitute change relationships with buyers as if its price and installation charges are less than the ExxonMobil. In some of the substitutes the prices are much more than the company prices. As per the change in the price of the product the supplier changes the relationship with the buyers.