ExxonMobil Limited

The Price Strategy Plan for ExxonMobil Limited

The paper is a price strategy plan for ExxonMobil limited, in response to a task assigned by the managing director of Maryland Creative Solutions. The price strategy will incorporate the concept of predatory pricing and maximizing economic efficiency. The paper will also discuss how profit maximization can be attained in ExxonMobil.

Using Predatory Pricing

ExxonMobil should incorporate the model of predatory pricing to deter other emerging competitors in the oil and gas industry (McCalman et al., 2013). The strategy involves reducing its oil and gas prices to discourage new entrants in the business. The company can also offer high discount rates to create monopoly competition with other enterprises. After the withdrawal of competitors and entrants, ExxonMobil can now raise its prices to the initial level. When this pattern is repeated in several instances, the potential business rivals are eliminated, and the company enjoys a stable market (McCalman et al., 2013).

Maximizing Economic Efficiency

The company should also utilize the principle of maximizing economic efficiency where all the resources in the firm are optimally used according to their budget. The management should minimize any wastes and inefficiencies. The overall benefit of this principle will be high business growth, entry into new markets, and the maximization of profits since the resources are utilized optimally and efficiently (McCalman et al., 2013). When the supply and demand graph is at equilibrium, the company enjoys maximum economic efficiency and all the benefits that come with this concept.

Reaching Profit Maximization

After implementing the above pricing strategies, a follow-up meeting will be conducted to determine how ExxonMobil can reach the point of profit maximization. Maximum profit is attained when marginal cost is equal to marginal revenue (Marchuk & Fabiianska, 2017). An assessment will be done to determine the number of marginal costs and marginal revenue. The outputs will be increased if marginal income exceeds marginal cost. If the marginal costs exceed marginal revenue, the outputs will be reduced (Marchuk & Fabiianska, 2017).

References

Marchuk, A., Fabiianska, V. (2017). Product Quality as a condition for maximization of profit: Accounting and control aspects. Economic Annals-Xxi, 163, 85-90.

McCalman, P., Stahler. F., & Williams, G. (2013). Contingent trade policy and economic efficiency. Kiel: Kiel Inst. for the World Economy.