Managerial Economics Case Study
Managerial Economics Case Study
A leading manufacturer, producer, and distributor of oil, gas, and petrochemical products, ExxonMobil has established its operations in different parts of the world, including the United Kingdom and India. Conducting business in these countries necessitates adherence to the monetary, fiscal, political, and market requirements and further complying with governmental rules and policies that regulate the organization’s operations. As will be portrayed herein, ExxonMobil’s operations are characterized by various components shaping or influencing its sustainability within the nation and its surrounding neighbours. The depiction of these components will necessitate a thorough review of its economic activities’ monetary, fiscal, and political aspects. These will be coupled with an in-depth analysis and comparison of the countries in terms of their market structure, the effects of the major macroeconomic indicators, and local and foreign trade policies.
Exxon Mobil Corporation entails an international oil and gas company based in Irving, Texas. Originated from Standard Oil, owned by John D. Rockefeller, ExxonMobil was formulated and established on November 30, 1999, through a merger between Exxon (formerly Standard Oil Company of New Jersey) and Mobil (the former Standard Oil Company of New York). The primary commodities associated with the company include Exxon, Mobil, Esso, and ExxonMobil Chemical (ExxonMobil, 2019). Throughout the years, its operations have contributed to ExxonMobil being ranked one of the leading firms globally in terms of revenue.
Most fundamentally, between 2016 and 2017, ExxonMobil ranged between the first position to sixth in terms of market capitalization and public trading. In 2016, the company was position three in the Forbes Global 2000 list, while in 2017, ExxonMobil was number ten among the companies that made the most profits, as per Fortune 500. Subsequently, in 2018, ExxonMobil position two out of the largest organizations in America, as stipulated by 500 rankings based on total revenue (ExxonMobil, 2019). These accomplishments have been characterized by company shares distributed across various local and international institutions. For instance, a large portion (55.56%) of ExxonMobil’s shares is owned by institutions such as The Vanguard Group with 8.15%, BlackRock with 6.61%, and State Street Corporation with 4.83%, as of 2019.
As one of the Big Oil companies globally, ranked 14th, ExxonMobil produced 20 billion barrels of oil equivalent (BOE) as of 2016. Besides, ExxonMobil owns 37 refineries in more than 21 nations, which constitute a cumulative refining capacity of approximately 6.3 million barrels (1,000,000 m3) daily, pushing the company to position seven among the most significant global refiners. Despite these accomplishments, ExxonMobil has enjoyed its fair share of criticism based on its slow response to cleaning up efforts following the 1989 Alaskan oil spill that brought immeasurable damage to the world’s environment (Chart Industries, 2020). Additionally, ExxonMobil has been associated with a long history of lobbying activities and efforts to deny climate change and objection to the global warming consensus. Thus, ExxonMobil has employed various measures in minimising the environmental impact of its global operations. Still, the company remains the target of accusations related to inadequately addressing human rights issues, American’s foreign policy influence, and its effect on other countries’ future.
Nonetheless, ExxonMobil remains the most significant company not owned by the government in the energy sector that produces an average of 3% of the oil and an estimated 2% of the world’s energy. (ExxonMobil, 2019) Therefore, this case’s essence entails an in-depth overview and analysis of ExxonMobil’s operations by focusing on two countries, the United Kingdom and India. The analysis will delve into the market structure in which ExxonMobil operates for and within the two countries. These elements will be followed closely by a comparative analysis and analysis of the major macroeconomic indicators between the two countries and their potential effect on the company’s economic activities. Ultimately, this case study will analyse the foreign trade policy instruments applied in both countries.
A nation’s economy is shaped by the macroeconomic activities that bring in foreign investors and foster trade with different countries and regions. In this case, this report highlights ExxonMobil’s operations in two different countries, India and the United Kingdom, by focusing on their market structure and other macroeconomic indicators that influence the company’s economic activities. It will analyse the countries’ suitability for the company operations by epitomising the various indicators that affect the economy and trade activities.
ExxonMobil’s operations are organized into different global divisions categorised into three groups: stand-alone and ancillary divisions such as Coals and Minerals (ExxonMobil, 2019). Today, ExxonMobil’s global operations are renowned for their popular brand names, Exxon, Esso, and Mobil. The company manufactures products that facilitate transportation in the modern world, powering cities, lubricating industries, and further providing petrochemical building blocks that foster numerous consumer goods (Chart Industries, 2020).
ExxonMobil focuses on exploring oil, extracting, shipping, and wholesale operations within its upstream division. The downstream division specializes in marketing, refining, and retail operations for the company’s products. Lastly, the chemical businesses division is a merger between Exxon’s and Mobil’s chemical industries with main products that include olefins and aromatics, synthetic lubricant base stocks and additives, catalysts, and polyethylene, among others (ExxonMobil, 2019). These operations foster the identification, capturing, and evaluation of new oil and gas resources in operation countries. However, most of the production fields in which ExxonMobil is interested, especially in the North Sea, are operated by other companies as part of a joint venture. As a result, working in various locations around the world, ExxonMobil has, over the years, powered the economy of the neighbouring countries with significant investments in economic growth (ExxonMobil, 2019). These elements have facilitated the exemplification of the company’s commitment to supporting the communities within which it operates through education and economic empowerment, the provision of infrastructure, human capacity development, and health.
ExxonMobil’s Operations in the United Kingdom and Market Structure Analysis
Under the upstream division, ExxonMobil’s operations in the United Kingdom have involved activities such as the exploration and production of petroleum. Specifically, ExxonMobil holds or owns an average of 0.6 million acres (2,400 km2) of the land on the United Kingdom’s offshore. ExxonMobil exploration activities have emphasized the identification, acquisition, and evaluation of new oil and gas resources (ExxonMobil, 2019). As of 2019, ExxonMobil’s production activities entailed targeting approximately 40 production offshore oil and gas fields along the North Sea. The majority of the areas in which the company had targeted were operated by Shell U.K., boosting explorative and production operations as part of a collaborative effort (ExxonMobil, 2019). The code of practice applied in access the oil and gas infrastructure within the United Kingdom entails a voluntary agreement put in place by Oil & Gas UK in consultation with the Depart of Business, Energy, and Industrial Strategy (BEIS).
ExxonMobil’s operations in the United Kingdom have facilitated its rise in rankings as the largest oil pipeline distribution network, with approximately 700 kilometres of pipeline. Most of the United Kingdom’s refinery products are transported by pipeline to distribution terminals at Avonmouth, Birmingham, Hythe, Purfleet, and West London. The remaining products are transported by road or sea (ExxonMobil, 2019). In 2015, ExxonMobil invested £254 million in the United Kingdom North Sea, boosting its responsibility to an average of 5% of the oil and gas produced in the country. This investment and production activities further supplied the United Kingdom and other global markets with approximately 80,000 barrels of oil and about 441 million cubic feet of gas daily. Best known for its famous brands, Esso and Mobil, ExxonMobil remains the largest retailer in petrol across the United Kingdom. Thus, it serves around 800,000 customers daily through its retail network that comprises 1,100 Esso-branded service stations. Through its principal subsidiary in the United Kingdom, Esso, ExxonMobil is one of the largest offshore industry investors (FocusEconomics, 2021). However, investments in the North Sea are managed through 50/50 joint operations with Shell.
ExxonMobil in India and Market Structure Analysis
Incorporated and registered in May 1996, ExxonMobil has its presence in India through its upstream, downstream, and chemical businesses. Its offices are located in Bengaluru, Gurgaon, Mumbai, New Delhi, and the National Capital Region. The upstream division focuses on providing consultancy and support services ranging from LNG business development and marketing, natural gas and support exploration and production services. On the other hand, the downstream division distributes, sells, and markets Mobil-branded lubricants and specialties (Chart Industries, 2020). Specifically, the downstream business sector has marketed fuel and lubricants in India since 1995 under the Mobil brand through operations such as importation of base oils, lubricant oil branding, packaging, and distribution and marketing. The chemical business is carried out as a service provider to other marketing agents for other ExxonMobil affiliates, facilitating imports and inland sales through distributors and directly to consumers and business analysis since 1986 (The Economic Times, 2021). For instance, in Bengaluru, ExxonMobil has a Technology Center that delivers development support. The business and the technical support centres provide various services for ExxonMobil’s operations worldwide.
ExxonMobil, operating as ExxonMobil Company India Private Limited, entails an Indian non-government firm with a private unlisted firm and a company listed by share. Specifically, ExxonMobil’s authorized capital in India stands at Rs 3500 lakhs and a 55.14429% paid-up capital (Rs 1930.05 lakhs). The last annual general meeting (AGM) for ExxonMobil Company India Private Limited was held on 29 September 2017. The company’s previous financial updates were done on 31 March 2017 as per the Ministry of Corporate Affairs (The Economic Times, 2021).
Comparative Analysis in the Major Macroeconomic Indicators
Indeed, a country’s gross domestic product (GDP) serves as a significant indicator of the national economy’s shape. In the United Kingdom, the gross domestic product (GDP) growth rate has portrayed levelling prospects in recent years after a lengthy period of the effects following the 2008 financial collapse (Monetary Policy Committee, 2020). The average GDP growth rate in the United Kingdom has averaged at 0.58 percent since 1955 and an all-time high of 16.10 percent in the third quarter of 2020, and a record low of -19% in the second quarter of 2020. The country’s GDP’s annual growth rate at market prices has been based on constant local currency. At the same time, the aggregates are determined through factors such as the sum of the gross value added by all resident producers in the economy and product taxes minus any subsidies excluded in the value of the products.
Based on the constant increase in the population from 62.51 million to 67.88 million between 2010 and 2020, the nation’s GDP growth rate has significantly fluctuated from 1.95% to 1.46% in the same period, with an all-time high of 2.61% in 2014. Specifically, the GDP growth rate in 2010 was 1.95%, which declined to 1.54% in 2011, a -0.41% fluctuation. In 2012, the growth rate in the GDP further declined to 1.48%, a -0.06% decline. In 2013, Britain’s economy grew by 2.14%, a 0.66% annual change, marking the fastest pace in approximately three years. During this year, the country’s output increased across industrial sectors such as agriculture (1.4%), production (0.5%), construction (2.5%), and service (0.7%). These rates were followed closely by a substantial growth in the GDP by 2.61%, a 0.47% annual change in 2014; 2.36% growth rate in 2013 (-0.25% in 2015); 1.92% in 2016 (-0.44% annual change); 1.89% in 2017 (-0.03% annual change); 1.34% in 2018 (-055% annual change); and a slight increase of 1.46% in 2019 (0.12% annual change).
However, projections indicate that the economy should recover this year following the potential easement of the Covid-19 pandemic and other monetary or fiscal boosts. The decline in the UK’s GDP growth rate has been associated with numerous factors that include the Brexit disruption that continues to subject the nation to limitations in access to the EU market and further indicates constraints over the growth momentum (Qiang & Kusek, 2020). The catastrophic events associated with the EU’s exit, coupled with the prolonged social distancing measures brought along the Covid-19 pandemic, have posed, and continue to pose, downside risks. Nonetheless, the economy is expected to expand by approximately 6.0% in 2021. Following this trend, the GDP per capita at constant prices between 2010 and 2019 was USD 39,436 and USD 42 330, respectively. Though the trend portrays an increase, the rate has fluctuated exponentially, and similar patterns have been observed between 2020 and 2021 (Trading Economics, 2020).
As portrayed in the table below, UK’s GDP per capita at constant prices increased significantly from 2010 to the subsequent years from $39.436 to $42,039 in 2011 (6.60% annual change). This increase was followed closely by a constant rise to $42,463 (1.01% annual growth rate) in 2012, $43,445 (2.31% growth rate) in 2013, and $47,426 (9.16% growth) in 2014. From 2015 through to 2017, the GDP growth rate per capita at constant prices slightly declined to $44,975 (-5.17% annual change), $41,064 (-8.70% annual change) in 2016, and $40,361 (-1.71% annual decline) in 2017 (Macrotrends, 2021). However, the GDP per capita at constant prices started levelling up in 2018 at $43,043 (6.64% annual change) but later declined in 2019. Between 2020 and 2021, the UK’s GDP growth rate stands at a moderate rate of 1.0% from 16.1% in the third quarter.
Similarly, based on an annual variation of the consumer price index (CPI), the United Kingdom’s inflation rate was approximately 1.74% as of 2019 compared to 2.49% in 2010. (See the table below) (FocusEconomics, 2021). Following this trend, the unemployment rate, based on the active population percentage, stood at 3.8% in 2019, a decline from 5.4% in 2015 and 4.1% in 2018 (Macrotrends, 2021). Similar to the facts that contributed to changes in the country’s GDP growth, the UK’s inflation rate has fluctuated significantly from 2010 to 2020. For instance, since 2011, the UK’s inflation rate was 3.86% with an annual change of 1.36%, but in 2012, the rate declined to 2.57% (-1.28% annual change). This trend continued through the subsequent years with a rate of 2.29% (-0.28%) in 2013, 1,45% (-0.84%) in 2014, and 0.37% (-1.08%) in 2015. In the subsequent years, the inflation rate in the UK portrayed increment prospects from 1.01% (0.64% annual change) in 2016 and 2.56% (1.55% annual change) in 2017 (Macrotrends, 2021). This rate was later characterized by a slight decline to 2.29% (-0.27% annual change) in 2018 and further by 1.74% (0.55% annual decline) in 2019.
Nevertheless, the policy interest rate applied in the United Kingdom averaged 0.75% between 2018 and 2020. Following the 2008 financial crisis, people in the UK reduced their expenditure when the majority lost their jobs, which led to the government cutting interest rates to relatively low levels to support employment opportunities and the people’s income. As a result, the UK government has made it necessary to keep policy interests relatively low over the past few years (Macrotrends, 2021). For instance, between 2010 and the third quarter of 2016, the policy interest rate was regulated to an average of 0.5%, which later declined to 0.25% until the last quarter in 2017. Between the last quarter of 2018 and the first quarter of 2020, the policy interest rate was averaged at 0.75%, which drastically declined to 0.25% and later to 0.1% in the first and last quarters of 2020, respectively. During the same period, the general government’s balance (fiscal balance calculated as a percentage of the GDP) in the UK entailed a deficit of 1.8% of the GDP in the 2018-2019 fiscal year (Macrotrends, 2021). During the period between 2010 and 2019, the United Kingdom’s unemployment rate fluctuated between 7.79% to 3.85%. Although the rate portrayed a potential increase in 2011 at 8.04% (0.25% annual change), the trend has followed a downward pattern until 2019 (see the table below). Between 2010 and 2012, the general balance declined from -8.7% to -7.3%, which stagnated through to 2013, and continued to decline from -5.8% in 2014, -5.2% in 2015, -4.2% in 2016, -2.8% and -2.7% in 2017 and 2018, and -1.8% in 2019 (US Department of State, 2020). During this period, the balance of payments stood at -172.09 USD billion in 2010, which slightly increased to -170.564 USD billion in 2012, followed by a significant decline to -224.06 USD in 2012. The figures have fluctuated from -115.41 USD billion in 2013 to -222.98 USD billion in 2019 (See table below). Based on an average period (aop), the UK’s exchange rate has portrayed volatility in recent years amid political turmoil regarding Brexit and debate over when formal negotiations should be initiated with the European Union (Macrotrends, 2021). In 2010, the exchange rate averaged 1.33 GBP per USD, which continued to fluctuate to 1.28 GBP per USD in 2018 (FocusEconomics, 2021).
|GDP growth Rate||1.95%||1.54%||1.48%||2.14%||2.61%||2.36%||1.92%||1.89%||1.34%||1.46%|
|GDP per capita at constant prices (in $)||39,436||42,039||42,463||43,445||47,426||44,975||41,064||40,361||43,043||42,330|
|Policy Interest rate||0.5%||0.5%||0.5%||0.5%||0.5%||0.5%||0.5%||0.25%||0.75%||0.75%|
|General government balances||-8.7%||–||-7.3%||-7.3%||-5.2%||-4.2%||-2.8%||-2.7%||-2.7%||-1.8%|
|Balance of payments in USD Billion||-172.09||–||-170.564||-224.06||-115.41||–||–||–||–||-222.98|
|Exchange rate (% of GDP per USD)||1.33||1.28|
In India, the GDP growth rate was at its peak in 2010 at 16.1%, but over the years, it had declined from 6.3% in 2018 to approximately 4.5% in 2020. This slowed growth depicted a significant reduction in consumption across the private sector, manufacturing, construction, and agriculture activity. Moreover, the stock of foreign direct investment (FDI) in India experienced a decline since 2010, mirroring a similar reduction in India’s private investment (Shroff, Pandey, & Nijhawan, 2021). During this period, the substantial increase in demographics indicated that India should have generated millions of job opportunities annually. According to Guruswamy (2019), the plunge in India’s economic growth since 2010 is based on the change in the economy’s composition. For instance, in 2010, agriculture contributed 17.5% of the GDP, industrial activities brought along 30.2%, while services contributed to 45.4%. Contrastingly, in 2019, agriculture declined to 15.6%, industrial activities fell to 26.5%, and services to 48.5%.
However, based on the informal economy’s large size, India’s unemployment rate rose exponentially to 5.36%, a 0.03% increase from 2018 at 5.33%. This downward trend has averaged at approximately 5% since, in 2010, India’s unemployment rate was 5.64%, which increased to 5.65% and 5.67% between 2011 and 2013 (Macrotrends, 2021). In 2014, the rate continued to decline to 5.61% in 2014, 5.57% in 2015, 5.51% in 2016, and 5.42% in 2017. Contrary to this pattern, the GDP per capita at constant prices has continually increased from $1,358 in 2010 to $ 2,113 in 2019. This increase has followed an upward trend as in 2012 the GDP per capita at constant prices was $1,444, $1,450 in 2013, $1,574 in 2014, $1,606 in 2015, $1,1,733 in 2016, $1,982 in 2017, and $2,006 in 2018 (FocusEconomics, 2021). During the same period, India’s inflation rate has drastically fluctuated from 11.99% in 2010 to 7.66% in 2019, considering the increase in price across commonly consumed commodities.
Simultaneously, India’s monetary policy interest rate since 2010 has averaged at approximately 4.0%. Still, in 2019 it declined to a 4.40% decline from 6.25% in the previous year, while general government balances during this period have fluctuated from $- 74.62 billion in 2010 to $-78.07 billion in 2019 (Macrotrends, 2021). Similarly, the balance of payments widened significantly to $ 130.5 billion (7.5% of the GDP) between 2010 and 2011 stood at USD -153.5 billion, while the exchange rates in India has continually grown from 44.7125 INR vs. USD in 2010 to 70.91 vs. USD in 2019 on an average period (aop) and as a percentage of the GDP (US Department of State, 2020).
|GDP growth Rate||8.50%||5.24%||5.46%||6.39%||7.41%||8.00%||8.26%||7.04%||6.3%||4.5%|
|GDP per capita at constant prices (in $)||1,358||1,458||1,444||1,450||1,574||1,606||1,733||1,982||2,006||2,100|
|Policy Interest rate||4.0%||4.0%||4.0%||4.0%||4.0%||4.0%||4.0%||4.0%||6.25%||4.40%|
|General government balances||-8.7%||–||-7.3%||-7.3%||-5.2%||-4.2%||-2.8%||-2.7%||-2.7%||-1.8%|
|Balance of payments in USD Billion||130.5||–||–||–||–||–||–||–||–||-153.5|
|Exchange rate (% of INR per USD)||44.7125||70.91|
Monetary and Fiscal Policy Analysis and their Impact on ExxonMobil’s Economic Activity
ExxonMobil’s results in each country’s economy are vulnerable to various threats embedded in the global oil, gas, and petrochemical businesses. Most of these threats extend beyond the company’s ability or control and pose adverse effects to its business operations and financial condition. Specifically, the country’s economic conditions in which ExxonMobil operates may lead to its operations’ undesired impacts due to various factors. Among the top factors include the increase in demand for energy and petrochemicals, directly associated with expansive activities and prosperity levels (World Bank Group, 2020). However, when recessions occur or other instances characterized by negative or low economic growth, ExxonMobil’s financial activities and operations directly. Additional components that adversely impact the company’s economic conditions and activities and the country of operation include changes in the rate of population growth, civil upheaval, austerity programs put forth by the government, trade tariffs, public health or security concerns, or fluctuations in the exchange rate on the currency (Shroff, Pandey, Nijhawan, 2021). Their impact occurs due to changes in the demand for energy and petrochemicals.
Thus, these factors are coupled with other aspects that include downgrading debt within the sovereign nation, limitations to accessing debt markets following legal constraints, and restructuring of monetary, fiscal, or political systems such as the European Union. These components impair the functionality of the financial markets and the nation, in general (Qiang & Kusek, 2020). They collectively pose various threats to ExxonMobil, including predisposing the company to the security risks to its financial assets and its customers and partners in terms of their ability to fulfill their dedication to the firm. For instance, due to the Brexit movement in the United Kingdom, the policy interest rate has since 2018 stagnated at 0.75% due to the ongoing debate and the uncertainty of its monetary, fiscal, and political restructuring economy. Moreover, the outbreak of the Covid-19 pandemic has brought along unforeseen effects to the world by limiting movements, requiring social distancing measures, and locking down businesses within countries. These events have contributed to a continuous decline in the country’s inflation rate (-1.79% by 2019) and an unemployment rate at 76.6% (Trading Economics, 2020).
Similarly, the Indian market is characterized by various factors that may affect ExxonMobil’s economic activities. For instance, when the World Bank anticipates that the rate of inflation may fall below the government’s targeted level (2%), the economy’s growth tends to be slow down. At the same time, the economy faces a recession. As a result, interest rates are strategically reduced (loose monetary policy effect) (World Bank Group, 2020). Alternatively, suppose the world bank anticipates rapid growth in the economy and inflation may exceed the government’s targeted level, increase interest rates to regulate economic growth and further minimize pressure related to inflation, the tight monetary policy effect. In the latter case, an increase in the interest rate leads to a decline in consumer expenditure and investment, resulting in inflation. As of 2019, India’s policy interest rate stood at 4..40%, an increase from 3.4% in the previous year.
Akin to India’s case, the UK has faced similar interest rates, leading to potential threats to ExxonMobil’s economic activities. An increase in the interest rate hinders consumer spending, and investment lowers the inflation rate (US Department of State, 2020). The company’s performance in the economy is predisposed to adverse effects due to inflation and interest rate changes, fluctuations in the currency exchange rate, and other market condition at the local and regional levels.
Analysis of the Foreign Trade Policy Instruments and their impact on ExxonMobil’s Economic Activity
Undoubtedly, political and governmental activities can adversely affect ExxonMobil’s economic activities through limitations in the accessibility of its oil and gas resources. For instance, limiting foreign investments in the oil and gas sector leads to a significant boost in the commodities’ price, especially when national governments do not portray any need for capital from external sources (Monetary Policy Committee, 2020). Specifically, a decrease in the aggregate demand leads to the government cutting expenditure (G) and increasing taxes. The increase in taxes reduces consumer spending, and the fiscal policy’s rigidity will cause an improvement in the government budget deficit. However, when faced with situations that lead to an increase in the aggregate demand, the government tends to increase its expenditure and further cut taxes. By lowering taxes, consumer expenditure increases exponentially due to the rise in their disposable income, which, in turn, worsens the government budget deficit and the need to increasing borrowing (Qiang & Kusek, 2020).
Following the Covid-19 pandemic, the UK and India have pursued expansionary fiscal policies to stabilize and sustain operations. As a result, both governments have been forced to cut VAT to boost consumer spending, translating into a significant increase in government borrowing (Trading Economics, 2020). The increased borrowing has lowered the countries’ currency value, leading to fluctuations in the currency exchange rate. For instance, by the end of 2019, the UK’s exchange rate averaged at 1.33 GBP per USD, while India was 70.91 per USD on an average period (FocusEconomics, 2021).
Limitations in the Case Study and Recommendations
Although much of the information is available on various sources, it is quite challenging to determine their validity and reliability. Besides, verifying the data presented in these sources is a cumbersome and time-consuming task that requires in-depth analysis and comparison of the information from the country’s or company’s website and physical records. Another limitation arises when these companies fail to voluntarily produce their data in fear that such disclosure may expose competitively sensitive commercial information, leading to violation of non-disclosure laws. To address these challenges, it would be essential to seek the relevant information from the recommended sources that range from government sites, publicly released data from the company, and publications on the recent activities.
By regulating the policy interest and exchange rates, India would serve as a favorable market for ExxonMobil’s operations. It would encourage consumer expenditure based on an increase in foreign direct investment by corporations seeking to tap the firm’s opportunities. Besides, a partnership between the Indian government and ExxonMobil would boost the economy by providing employment opportunities across manufacturing, services, and logistics platforms. This way, both ExxonMobil and India, in general, would benefit from profits reaped, hence making it a hub for increased opportunities within the region and a leading producer and supplier of ExxonMobil products. Similarly, the Brexit initiative could boost ExxonMobil’s operations in the North Sea. The nations within this region, including the United Kingdom, would make independent decisions on the products, foreign investors, and trade partnerships. Consequently, partnering with ExxonMobil would boost its economic activities by increasing its presence within the region, hence increasing profits and productivity.
Despite its success in different countries, ExxonMobil, akin to other international organizations, is faced with numerous challenges characterized by monetary, fiscal, and political changes or restructuring within the country of operation. These changes bring along limitations to the local and foreign expenditure that further culminate in changes in the interest and exchange rates based on the people and businesses’ ability to spend their income on various products. Most fundamentally, government and political factors significantly affect ExxonMobil’s economic activities. They lead to adverse effects that affect operations, limit access to various commodities and services, and put laws and sanctions that prohibit the company from doing business in some countries.
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