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Business Research Practices
Chapter 2
Literature review
2.1 The Overview of Exxonmobil
In 1998, Exxon and Mobil signed a definitive agreement to merge and form a new
company called Exxon Mobil Corporation. "This merger will enhance our ability to
be an effective global competitor in a volatile world economy and in an industry that
is more and more competitive," said Lee Raymond and Lou Note, chairmen and chief
executive officers of Exxon and Mobil, respectively. After shareholder and regulatory
approvals, the merger was completed November 30, 1999.
The corporate entities that would become Exxon and Mobil began the 20th century as
components of one company. At the end of the century, they came together as a single
premier organization. For most of the years in between, they blazed separate trails as
independent, competing enterprises. Each company placed a singular imprint on the
energy industry and on a dynamic era of world history while, in many ways, energy is
today one of the world’s most essential.
ExxonMobil and its affiliated companies are present on a world scale, doing business
in some 200 countries and territories. Exxonmobil explore for oil and natural gas on
six of the seven continents and are the world's largest non-government gas marketer
and reserves holder. Exxonmobil offer a wide range of fuels, lubricants and
petroleum products under the ExxonMobil, Esso and Mobil brands in Thailand
Esso will change its service station strategy from dealer-owned to company-owned
and operated. This policy will allow Esso to effectively implement a price cutting
strategy and control the quality of the fuel it sells.
The oil market situation this year will continue downwards with low marketing
margins. The margin this year has plunged to around Bt0.70-0.80 per liter compared
with Bt1.30-1.40 last year. The situation is expected to deteriorate further next year
since the demand for fuel oil is projected to fall in 2000. The lower margins have
forced many oil companies to shut down some of their service stations.
At present, the profit margin for oil products in Thailand is about Bt0.70 to Bt0.80 a
litre, but it sometimes falls lower, he said. For example, diesel and petrol were sold at
a loss in the middle of last month
Esso Thailand delivers products and services under the trademarks of ESSO and
EXXON. Products include; fuels, lubricants, and specialty products (such as metal
working fluids, white oils, insulating oils, jute batching oils, and rubber oil).
During the early 1990's Esso and the other international and local fuel oil supply
companies all pursued policies of rapid countrywide service station expansion. Esso
in order to differentiate itself from its competitors undertook an internal study to look
at Thailand best practices and develop an optimal competitive expansion strategy to
increase Esso's competitive market position.
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Business Research Practices
2.2The Structure of Exxonmobil in Thailand
Figure 2 : Types of business
Exxonmobil
Mobil brand
Esso brand
Industrial
Retail
Fuels income
Non-fuel income
Source : Exxonmobil Business Structure in Thailand
2.3 Type of Project: Competitive Market Research/Thailand
Tractus, in collaboration with the Broker Group's market research division developed
and administered a questionnaire to customers at selected Esso sites in Thailand and
collected traffic flow and general competitor presence information in areas
surrounding six targeted sites each regional area, including:

Created and developed a characteristic Esso customer profile from interviews
held with customers at the Esso service stations;

Assisted in determining what products and services were most desired by Thai
consumers at service stations;

Quantified traffic flow passing and entering the targeted Esso sites to
determine passing traffic market share;
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Business Research Practices

Quantified passenger cars, diesel pickups, heavy trucks frequency to determine
if there was a differentiation in products and services desired by different
types of motorists;

Determined the current level of Thai consumer's market sophistication and
current/future interest in other services or products;

Screened the area surrounding the targeted sites for competitor presence;

Gathered information on competitor presence, products/services available, and
a general background on their business development strategy;

Evaluated competitors product and service offerings; and developed a
competitive site profile and compiled a preliminary list of potential co-locator
products/services to be offered.
Retail Stations
ExxonMobil sells motor fuels at 45,000 stations in more than 100 countries.
In the early 1900s small stores sold gasoline in cans to the first automobile drivers.
Service stations became widespread in the United States and Europe in the 1920s as
the vehicle population began to grow.
In the United States, the total number of service stations grew steadily, booming after
World War II as America became a nation on wheels. In the 1970s, however,
changing customer needs and increasingly stringent safety and environmental
practices made many small service stations uneconomic. U.S. customers want the
convenience, service and value generally found in large multi-pump facilities located
on major travel routes and offering convenience stores or fast food restaurants. The
conventional "gas station" that includes service bays — a common sight in the U.S. a
generation ago — is less common today because of improved automobile reliability
and longer service intervals.
Scale and volume are critical to service station efficiency and success. A service
station in the U.S. or Europe may dispense more than 250 thousand gallons (one
million liters) of gasoline every month.
Similar trends are evident in other industrial countries, while smaller neighborhood
stations with service bays are still common in Latin America, Asia and Africa where
older vehicles still require more frequent maintenance.
Thirty years ago, many U.S. stations were owned and operated by oil companies
themselves. Today, ExxonMobil owns and operates about 6 percent of the 16,000
branded outlets in the U.S. The remaining 95 percent are operated by independent
dealers, by distributors with multiple outlets or by other companies. Relationships
with our dealers and distributors are governed by contracts covering rent, supply
arrangements, quality assurance, marketing and other issues to form a sound business
relationship and assure value and service for our customers.
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What may not be obvious at a service station is the advanced technology used to
ensure safety and environmental protection as well as service and quality. When
customers refuel, the gasoline is pumped from underground storage tanks to the island
dispenser and through the hose and nozzle into the vehicle's tank. Modern service
stations use rust-proof, double-walled tanks made of fiberglass, with special corrosion
protection and emergency shut-off controls. Vapor recovery systems are employed
where needed to reduce air emissions. Advanced leak detection devices can be
monitored remotely in centralized locations to protect the local environment.
Along with safety and sound environmental management, customer convenience is
the focus of today's retail gasoline business. Faster pump dispensers and the ability to
pay at the pump island are increasingly common features in highly developed
markets. New technologies such as ExxonMobil's SpeedpassTM allow purchases
without cash or conventional credit cards.
In addition to motor fuel, many service stations now include other retail offerings.
Worldwide there are more than 11,000 Exxon, Mobil and Esso branded convenience
stores, providing customers in many parts of the world with fresh food and baked
goods as well as convenience items.
In developing countries, Esso and Mobil branded stations bring people clean, safe and
efficient service to support increasing mobility and a growing standard of living.
All this takes a significant investment. In metropolitan U.S. markets, a single retail
facility may cost nearly $2 million to build and stock. In large cities or on major
highways, the cost may be significantly higher.
People, hard work, advanced technologies, investment capital and careful
management — these are the necessary ingredients to compete business
ExxonMobil has been in business for nearly 120 years. Despite our size and success,
we currently supply only 15 percent of United States and worldwide gasoline demand

Continually reduce costs to achieve best-in-class performance

Capture full benefits of integration with ExxonMobil's operations

Marketing earnings declined in 1999, primarily due to an inability to pass
along higher crude prices, as well as intense competition in all markets.
Foreign exchange effects were also unfavourable. Sales volumes increased
slightly above 1998 levels

Focus on businesses that capitalize on our core competencies

Build proprietary technology positions

Selectively invest in internationally advantaged projects
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Business Research Practices
ExxonMobil markets gasoline and other fuel products at more than 45 thousand
branded service stations in more than 100 countries. Its affiliates serve aviation
customers at 700 airports in 80 countries, marine customers at 150 ports in 60
countries and some 1 million industrial and wholesale customers in 50 countries. The
company markets under three of the best known brands in the world: Exxon, Mobil,
and Esso.
Marketing earnings declined in 1999, primarily due to an inability to pass along
higher crude prices, as well as intense competition in all markets. Foreign exchange
effects were also unfavourable. Sales volumes increased slightly above 1998 levels
2.4 STRONG PRESENCE IN ESTABLISHED MARKETS

In the United States, market sales of motor gasoline increased 4 percent in
1999. ExxonMobil continued to upgrade retail facilities, installing over 150
modern destination convenience stores during the year. These investments
have significantly increased merchandise sales.

Imperial Oil Limited (ExxonMobil interest 69.6 percent), the largest refiner
and marketer in Canada, continued to expand its network of convenience
stores and recently opened a new Tiger market destination convenience store
in Calgary, Alberta. The site is the first in a series of about 80 such stores
Imperial plans to

build in major Canadian markets over the next 3 years. Imperial's retail motor
gasoline sales increased 3 percent in 1999.

ExxonMobil and Tesco (the leading grocer in the United Kingdom) have been
test marketing over the past year at nine sites in the United Kingdom. The
Tesco branded stores, with Esso branded forecourts, provide customers the
quality and value of Esso's product offering and Tesco's grocery retailing
expertise. Consumer acceptance of the alliance has exceeded expectations
2.5 GLOBAL MARKETING EXPANSION CONTINUES
ExxonMobil has continued to identify and pursue profitable expansion opportunities
in higher growth markets, particularly in Latin America and Asia-Pacific.

ExxonMobil is currently among the industry leaders in retail chain
modernization and has produced two very successful large-format
convenience stores concepts. Both the On The Run and Tiger market largeformat C-store concepts have produced industry leading results in the United
States and abroad.
ExxonMobil has developed more than 440 large-format convenience stores in the
United States under the Tiger market and On The Run brands. Overall sales results as
well as same-store sales increases continue to exceed industry averages. In addition,
the On The Run convenience store design was recently awarded "The Best New
Overall C-Store Concept" by Convenience Decisions .
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Business Research Practices
Each year, ExxonMobil prepares a detailed, long-term outlook of worldwide
economic growth and energy demand. These forecasts, which we have prepared for
decades, are used to help us plan our business.
Of course, ExxonMobil is not the only organization interested in the future of energy
demand and supply. Energy policy is an important part of the world of energy, and
governments in the U.S. and around the world are interested in understanding this
subject. The work by organizations such as the International Energy Agency and the
U.S. Department of Energy, as well as other leading economic and energy forecasters,
has also been considered in developing the economic and energy trends
2.6 Industry Conditions

Worldwide primary petrochemical demand grew by 5 percent during 1999.
Growth was driven by strong economies in the developed nations of the world
and the beginning of a recovery in Asia-Pacific.

Commodity prices increased during 1999 in response to rising feedstock costs.
However, margins continued at near bottom of cycle conditions for many of
the company's high-volume commodity products.

Restructuring of the petrochemical industry continues at an unprecedented
level. Remaining firms are focusing on core businesses, building scale to
extend global reach and improve competitiveness, while others are exiting
petrochemicals completely. Magazine
Gasoline Prices
ExxonMobil takes its role as a fuel provider seriously and works hard to ensure a
reliable supply of competitively priced gasoline to customers around the world.
It's a vital product. Consumers are understandably sensitive to gasoline prices. And,
with price signs in many parts of the world on every main street, every small change
is instantly visible. People wonder why gasoline prices fluctuate so much, why prices
vary from place to place, and why prices are not lower.
Gasoline Prices over the Years
During the First World War, gasoline sold for about $0.25 per gallon in the U.S. If
that price had increased at the same rate as inflation (the change in the prices of other
goods and services), gasoline in 2001 would cost nearly $3.00 per gallon. The price of
gasoline has averaged about $2.00 per gallon in inflation-adjusted dollars over the last
80 years
The Cost of Gasoline
Over the long term, gasoline prices reflect crude oil prices, taxes and the cost of
refining and distribution, including measures for environmental protection and a
reasonable return for investors.
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