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GROUP 1: Ryan Bean, Ryan Herlan, Chinmay Joshi, Charles Daniel Bremnathan RIT: Strategic Management of Tech Innovation EXXON MOBILE CASE STUDY Elevator Pitch: Foreign direct investment (FDI) plays an extraordinary and growing role in global business. It can provide a firm with new markets and marketing channels, cheaper production facilities, access to new technology, products, skills and financing. 1 For a host country it can provide a source of new technologies, capital, processes, products, organizational technologies and management skills, and as such can provide a strong impetus to economic development. Non-renewable resources combined with corrupt governments rarely produce the economic growth that is theoretically possible, given the new revenue stream. The resource curse – inflated currency coupled with diminishing development of domestic industries – has historically left developing nations dependent on NRR revenues and suppressed economic growth. Investing firms’ dedication to corporate social responsibility and transparency policies, together with government investments in diverse industries and supporting infrastructure (education, healthcare, etc.), assist in leveraging NRRs to shape a sustainable economic future. What are the most important aspects of context in this complex case? E.g., The Royal Dutch/Shell experience? [1] Regulated Industries : The oil industry is regulated by multiple parties, differing by region. The process of drilling has to be approved by the domestic government, and typically involves environmental regulation and directives that monitor where and when companies can drill, to help control demand and pricing. 2 [2] Corporate Culture : Exxon Mobile has been involved in a variety of risky ventures that produced environmental disasters; they tend to ignore risk in lieu of profit. In addition, the organizational culture of government in this case is corrupt, increasing the risk of grafted revenues and reduced national economic dispersion. Three factors: elitist support of change, domestic pressure, and membership in international organizations contribute to the mobility of a government; Chad and Cameron lack these pressures and as such present barriers to change. 3 [3] Technology Trajectory : Sustainable technologies are not developed enough to warrant Exxon’s interests. This leads to a dominant demand for oil, increasing the allure to developing nations. Lastly, the limited education of Chad and Cameron’s population reduces the internal capability absorption necessary to sustain future industry competition relative to oil technologies and production speed. Why is it not a simple matter of FDI? Macrae defines corruption as an arrangement that involves a private exchange between two parties which influence the allocation of resources involving the use or abuse of public or collective responsibility for private ends. 4
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This note was uploaded on 11/19/2011 for the course COB 0104-722 taught by Professor Wollan during the Fall '10 term at RIT.

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