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the exxon factor

Michael Gouzerh shares the strategies that have made Exxon Mobil the world’s biggest company
BusinessToday reports

Exxon Mobil's revenues hit a historic high in 2006. At US$333.9bn, it has reached a financial milestone untouched by any other company in the world. Its profits of US$36.1bn were more than the combined profits of the next four companies (Wal-Mart Stores, General Motors, Chevron and Ford Motor Company) on the Fortune 500 list. It surpassed General Electric to become the most valuable US company by market capitalisation (US$375bn). The company pumps almost twice as much oil and gas a day as Kuwait and its energy reserves are larger than that of any other non-government company in the world.

"Exxon has outperformed other companies because of its wise investment policies," says Michael Gouzerh, chairman and CEO, Exxon Mobil Middle East Marketing Corporation. "Our business typically goes through cycles. If the price of oil was high in 2006, not long ago it was trading at US$10 per barrel. Exxon believes in investing consistently through both good and bad years. Our plans are not based on the next six months or two years but on the coming ten years. So, we are well positioned to continue our growth independent of oil prices." For example, the company will spend close to US$15bn on exploration and production this year.

The other article of faith for Exxon has been a focus on its core business. "Unlike other companies which have tried to diversify, we believe that the petroleum (oil, gas and petrochemicals) business is what we know and do not want to be distracted from it." The company boasts of a number of stellar brands like Exxon Mobil, Exxon, Esso, Mobil 1, Speedpass and Mobil Delvac. Gouzerh was in Oman to open a new Mobil 1 centre in Ma'abela, which is a joint effort between Bader Mansoor Trading and Oman Mechanical Services Company, an OMZEST group company. The quality of Exxon products can be seen from the growing list of automotive manufacturers who recommend their use. For example, the makers of Acura, Aston Martin, Bentley, Cadillac, Chrysler, Corvette, Dodge, Mercedes-Benz, Porsche and Saab automobiles recommend the use of Mobil 1.

Looking closer
In the last three years, Exxon has seen double-digit growth in the region. "The Middle East is a very exciting place. We have seen significant growth, largely driven by an increase in the number of vehicles on roads and the boom in economic activity." However, the market is not a homogeneous one with each country at different stage of development. While the UAE is a mature market in terms of growth, Oman still has a lot of potential for growth. Qatar, with its sizeable investments in gas, is becoming an important market for the company.

Despite a promising outlook, the Middle East market is still plagued by its own set of problems. "A number of countries have poor regulations and standards which allow low quality products to be imported and sold in their markets," says Gouzerh. Exxon is trying to educate customers about the benefits of using good engine oil, though in a price sensitive market the process has its limitations.