Exxonmobil: Social Responsibility in a Commodity Market Essay

1048 WordsNov 3, 20115 Pages
ExxonMobil: Social Responsibility in a Commodity Market Fall 2011 1. Consider and discuss the impact of the rising price of gasoline on as many other products and services as possible. Drivers realize that the price of gas is tied to the market value of crude oil, and has a direct impact to their daily commutes, errands, and vacations. However the reality is that the price of fuel has implications much grater than most consumers realize. Fuel prices affect nearly everything we purchase. For example, the price of farm commodities and food increase because farmers pay more for the fuel for their farm equipment and trucking firms pay more for fuel to get the commodities to market. These shipping “fuel surcharges” impact all goods…show more content…
In many cases this level of marketing has fostered premium prices, and dealership refusal to honor ongoing promotions, such as employee pricing. 3. Is ExxonMobil acting responsibly with respect to pricing its product? Can it keep its prices stable (or even lower them) when the market price is increasing? Should it even try? From the recent case data, ExxonMobil has not acted irresponsibility in pricing its gasoline products. Outside of the grocery industry, I have not heard of any business segments surviving on less than a 5% profit margin. In reading that ExxonMobil reported only a net profit of 8.5%3, it is difficult to state that the firm over priced its products to reap abnormal profits. Although Mr. Lee Raymond’s $400 million retirement seems grossly out of proportion in utilitarian terms, adding these funds back into the firm’s bottom line would not change the profit results. With profit margins of less than 10%, it is unlikely that ExxonMobil would be able to keep the price of gasoline fixed if sweet crude oil were to increase from $80 per barrel to $88. This 10% increase in raw material cost would have to be passed through to the customer in the form of higher prices for the firm to survive. 4. From the perspective of social responsibility, what role does the consumer play in the price of gas?? The consumer plays a very large role, as two-thirds of U.S. oil consumption is accounted for by the transportation sector.
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