Multiple foreign operations - Exxon

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ExxonMobil and its affiliated companies are present on a world scale, doing business in some 200 countries and territories. We 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. Exxon Mobil is a component of the Dow Jones Industrial Average. ExxonMobil Chemical is one of the largest worldwide petrochemical companies.

Exxon in Singapore

Exxon has a refinery in Singapore. The Singapore refinery of Exxon manufactures industrial and automotive lubricants, including the base oils that go into Mobil 1, the leading synthetic motor oil that provides cars with an outstanding level of engine protection and increased fuel economy.

It has the following operations in Singapore:

* Total manpower:
740 employees

* Total throughput:
Jurong - 309,000 barrels per day of crude oil
Singapore - 296,000 barrels per day of crude oil

* Key features:
Can handle a wide range of crudes and operate at different rates of "feed" in order to meet different requirements.

* Key markets:
Supplies petroleum products to the Asia Pacific region, with products also sold locally, and delivered to "third parties" ie independent oil traders and national oil companies who acquire crude oil, ship it to Singapore for refining and market the product themselves.

* Products:
15 grades of gasoline
10 grades of jet / diesel
10 grades of chemicals
5 grades of fuel oil

* Total size / land area:
Jurong - 2,000,000 sq m
Pulau Ayer Chawan - 3,187,972 sq m (including foreshore and all berths)

It has good contribution towards profit.

Using Exxon's information, what do you think would be the effect of increases/decreases in the dollar's exchange value on the firm's profitability?

There can be various Country-Specific Risks. It affects both domestic and foreign firms that reside in a host country. These risks, which arise from the actions of the host government, apply more to the multinational corporation whose cash flows are impacted. Examples include exchange controls, currency inconvertibility, and blockage of funds.

Exchange Controls

A common policy of host governments facing balance-of-payments difficulties is to impose exchange controls that block the transfer of funds to nonresidents.

Currency ...