ECO4451 TU Use the following information to create a set of recommendations.
ANSWER
Addressing Investor Concerns Regarding Import and Export Procedures
To [Name of Investor],
We recognise your dedication to ExxonMobil’s performance and are grateful for your involvement as a concerned investor. After carefully considering your worries about our importing and exporting practises, we would like to provide you with a thorough overview of the situation.
First and foremost, it is critical to recognise the essence of the petroleum sector. Due to the extra value created by processing and refining, petroleum products, significantly refined ones, are far more profitable than crude oil. This has been a critical component of our business strategy since it allows us to maximise shareholder returns while positively impacting the security of the world’s energy supply. It may appear advantageous to produce completed goods where crude oil is extracted. However, the economics of distribution and refining frequently make it more efficient and lucrative to concentrate these activities in different places.
Security issues are likewise of utmost importance. It is crucial to maintain a diverse supply network for crude oil and processed products to minimise potential disruptions brought on by geopolitical tensions, natural disasters, or other unforeseen events. We can reduce risks by operating in several areas and guarantee a steady supply of energy goods to international markets.
As a firm listed on the New York Stock Exchange (NYSE), our primary focus is earning profits in US dollars. This is relevant to the location of our corporate structure. We mitigate currency risk using established financial processes to maximise revenue conversion while conducting activities in numerous regions. With this strategy, we may take advantage of favourable exchange rates and reduce potential harm to our financial performance.
Furthermore, various elements, such as technological know-how, resource accessibility, and market dynamics, affect where to install specialised equipment. Refining facilities are strategically positioned depending on the accessibility of infrastructure, skilled labour, and logistical advantages. Given the enormous capital costs of replicating such facilities in every place that produces crude oil, the investments might be more than the advantages.
Regarding the price of new equipment, it is essential to remember that the petroleum sector is characterised by quick technological breakthroughs and changing regulatory norms. To maintain the highest operational effectiveness and environmental compliance, the decision to update or replace equipment is made only after thorough cost-benefit evaluations. We can centralise specialised equipment through import and export, minimising duplication and enhancing resource management.
To sum up, our practises for importing and exporting are based on strategic factors, including profitability, security, currency optimisation, know-how, and operational effectiveness. We are still dedicated to providing our shareholders with value while preserving a robust and flexible business model. We appreciate your attention to detail and will uphold our dedication to ethical corporate governance.
I appreciate your patience and assistance.
Sincerely,
(Your Name)
[Your Name]
ExxonMobil
QUESTION
Description
Use the following information to create a set of recommendations.
You or your group are members of the upper management team at ExxonMobil a large multinational corporation currently listed on the New York Stock Exchange (NYSE).(Hint: publically traded company) You report directly to the CEO and the board of directors.
Recently, an investor has purchased 5% of the outstanding stock in the company, and corporate rules this gives the investor the right to call a proxy vote for control of the company (the company takes this seriously).This investor is extremely concerned the company is importing and export goods in the same sector, particularly they are importing crude oil and exporting refined petroleum products. Why not just produce the finished products where the crude oil is located?There were legal reasons the company does not export crude oil; however, these rules have changed, and this investor is concerned the company is losing money. A consulting economist has given the management team tools to help management make their recommendation to the CEO.
https://atlas.media.mit.edu/en/
https://www.worldatlas.com/articles/the-world-s-largest-oil-reserves-by-country.html
https://rentar.com/best-crude-oil-world-crude-oils-better-others/
https://www.iea.org/statistics/
https://www.statista.com/statistics/273579/countries-with-the-largest-oil-refinery-capacity/
Your CEO has tasked you with writing a short response to the investor’s concerns about importing and exporting within the same industry.Note your response should include: the profit increasing nature of petroleum (finished products more profitable), security concerns, location of corporate structure (ie USA company wants dollar profits, European company want euro profits), location of the specialized equipment and cost of new equipment.
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