Share
Explore BrainMass

Global Feasibility Analysis for Company Considering Market Entry

The final project will be to develop a Global Feasibility Analysis for a company that is considering market entry into a selected country with a particular product or service. The focus is a preliminary analysis to be presented to the executive team with recommendations for a go/no go decision.

Focus of the Final Project

Topics to be addressed within the paper include:

? Description of the company and its products, goods or services.
? Identification of the major drivers of globalization for the industry
? Identification of a country for market entry
? Analysis of the economic development stage of the country
? Exploration of the risks and opportunities of the company doing business in the country.
? Identification of strategic actions and measurements, to include performance priorities, sources of competitive advantage, and competitive strategy in the industry in the identified country.
? Presentation of final recommendation with supporting rationale.

Solution Preview

Introduction:

The process of expanding into international markets is a difficult one which warrants careful analysis of the feasibility of such venture. It is therefore imperative that in pursuing business opportunities a careful analysis on the potential of success in the new market be carried out. The oil industry has over the past decades faced globalization of its business in a unique yet controversial manner that has elicited wide public debates and has resulted to various political actions between nations to ensure effective and efficient flow of the precious commodity (Bina, 2006, pp. 5). With South Sudan's recent independence from its Northern counterpart, the country has already made a debut to western oil companies to invest in the country with its vast oil reserves in order to foster economic development in this country after decades of conflict and poverty (Reuters, 2011). Among the companies that have spread their wide reach across the globe is Exxon Mobil. This paper analyses the feasibility of Exxon Mobil Corporation entering the South Sudan market and opening up its operations in this country.

Exxon Mobil Company Description and its products and services:

Exxon Mobil Corporation (Exxon Mobil) is the world largest company in the oil and gas industry having operations that span various countries in the United States, Europe, Australia/Oceania, Asia, Africa, and Canada/South America. This company based in Irving Texas and founded in 1870 was formed in 1999 with the merger of Exxon and Mobil. Exxon Mobil deals in the production, exploration and transportation of natural gas and crude oil and manufacturing and transportation of petroleum products. The company also produces and sells petrochemicals which include polyethylene, aromatics, olefins, polypropylene plastics and other products. It sells gas under the Esso brand worldwide with the company having interest in 37 refineries worldwide and marketing its products through approximately thirty two thousand retail stations. The company also has facilities that generate electric power with the company's principle business being energy exploration, manufacture, and distribution (Exxon Mobil, 2011).

In 2010, the company recorded a net profit of $30.4 billion a 57% rise from the previous year with oil and natural gas per day averaging 4.44 million barrels per day. The 2011 third quarter results for earnings per share was $2.13 exceeding 2010's third quarter results by 47.92%, while its earnings for the same period was $31.7 billion, a 49% rise over the same time period the previous year. On the other hand Exploration and Capital expenditures reached $26.7 billion as the company continues to pursue new opportunities and oil and gas explorations in order to meet the ever rising energy demand (The Wall Street Journal, 2011).

Major Drivers of Globalization in the oil industry:

Exxon Mobil operates in the oil industry which is mainly driven by demand for the product rather than price. The demand is more inelastic with changes in prices having little impact on the amount of oil consumed in the world. Most companies dealing in oil are global companies rather than local one with the growth of most of these companies driven by the ever increasing global demand for oil (Rapier, 2010).

Globalization is often motivated by the desire of countries to tap into the wider macroeconomic benefits that come with the free flow of financial capital and also by the desire of companies to increase their profits. George Yip (Daniels, Radebaugh, Sullivan, 2010) showed that in order to understand the degree of globalization in an industry it is imperative to analyze what drives globalization in that industry. He pointed out to five drivers of globalization, that is, market globalization drivers, competitive globalization drivers, government globalization drivers, technological globalization drivers and cost globalization drivers.

Within the oil industry, the market drivers of globalization that have increased effectiveness and efficiency in the oil industry are increased dependence of industries on oil with over 95% of industrial output depending on oil as a factor in production processes, increased interest to secure access to oil in various national governments, decreasing oil supplies with increased global customers due to increased global activities and rise of emerging economies such as China and India, and increased oil prices, growing global channels through which oil can be transported across nations safety, and increasing world brands in the global oil market with increased convergence in the customer's lifestyles, tastes and per capital income (Rapier, 2010, pp. 5).

The cost drivers in the oil industry are relocation of production facilities closer to source of oil, taking advantage of big differences in the costs between countries, increasing technological development and innovation in the production of oil, advancement in the methods of oil transportation across nations using pipelines, the discovery of new oil wells in places like Uganda, and rising of newly industrialized countries such as India and China which have capable productive capability at very low costs (BBC News, 2008, pp. 1).

The competitive drivers in this industry are few since the cost of entry by new firms is very high with higher barriers to entry. The competitive drivers are most of the companies in the industry being internationally oriented especially with respect to oil exploration, global strategic alliances such as the merger of Exxon and Mobil to form Exxon Mobil, and growth of interdependent global networks between countries of oil source and other nations (Exxon Mobil Annual Report, 2010).

The government drivers include increased push for national efficiency in oil, stronger international alliances between governments across continents to ensure oil efficiency in their ...

Solution Summary

Global feasibility analysis for Company Considering Market Entry is examined. A description of the company and its products, goods or services are determined.

$2.19