Negative Externality: Pakistans Carbon Tax

Negative Externality: Pakistans Carbon Tax Table of Contents (Jump to) Introduction Answer 1 Answer 2 Answer 3 Conclusion References Introduction The assignment is based on the concept of negative externalities. A negative externality normally is a cost that is incurred to the third party as a result of an economic transaction. The assignment is based on the case study of Pakistan’s policy for implementing the carbon tax. This way the government of Pakistan has taken a positive step towards dealing with the negative externality – pollution and green house gas emission. Later the assignment covers the other steps that must be considered by the Pakistan government to deal with the problem ad reduce the impact of negative externalities. Answer 1 Negative Externalities: It can be defined as the action of products on consumers that has the negative impact on the third party. Negative externalities are mainly concerned with the environmental effects of producing and consuming a product (Laffont, 2008). The main examples of negative externalities are air pollution, water pollution, noise pollution, systematic risk etc. A negative externality normally is a cost that is incurred to the third party as a result of an economic transaction. In this type of economic transaction, consumer and producer are the first and second party, and the third party is comprised of organization, individual, resource or property owner that get indirectly affected due to that transaction (Caplan, 2008). The negative externality is also known as external cost in economics. Some common negative externalities are: The smokers ignore the fact of the harmful impact of the passive smoking for the non smokers around them. Air pollution caused by the traffic impacts the lungs of the people who are not even travelling on the road The food wastage (Source: Buchanan, James, Externality.Economical) Negative externalities normally occur in the situations where property ownership of the assets and resources are not properly allocated and are uncertain. For instance, there is no owner of the oceans or the forests, so anybody can pollute them without any fear of getting sued by the owner. External cost like the cost of pollution makes the marginal social cost curve mush higher than the marginal private cost. (Source: Economicsonline.co.uk) Government Intervention to correct the negative Externalities: The environmental concerns are the most important challenge in front of government now days. They are taking up many steps to deal with the negative externalities and eradicate its harmful effects from the third party. The most common among them are the: Environmental tax: This is the most common approach of adjusting the negative externalities. This is also referred to as the â€Å"making of polluters day†. This tax increases the private tax of production or consumption with the aim of reducing the overall demand for the product that is causing the negative externality. For instance: money collected from the congestion charge of a vehicle that is entering a busy road. The environmental taxes include – the landfill tax, the congestion charges, vehicle excise duty and plastic bag tax. Problems with environmental taxes: Pollution tax has the following related problems: Assignment of the right level of taxation Consumer welfare effects Investment and employment consequences. Carbon Tax: Carbon tax refers to the tax that is imposed on the fuels’ carbon content (Holler, 1991). All the hydrocarbon fuel contains the carbon content in it like petroleum, natural gas and coal. They release the carbon dioxide in the atmosphere when they are burnt. Carbon taxes are formed to reduce the green house effects of gas emission through cost effective means (Gupta, 2007). . Carbon taxes are very regressive and impact the lower income group largely. The impact of carbon taxes can be addressed using the tax revenue for the lower income groups. The features of carbon tax are: This is a direct tax on the content of carbon in fossil fuel. It is considered as the most economical and efficient means for conveying the price signals that are crucial for reducing the carbon content It can be structured for softening the impact of the additional cost by distributing to the households. Carbon tax is supported by economists, public officials, environmental leaders and citizens. The carbon tax policies of government are significant for taking the global effort to fight the climatic changes. Pricing carbon is a positive step towards it. The government may interfere through the use of laws and regulations. For example, theHealth and Safety at Work Actcovers all public and private sector businesses. Local Councils can take action against noisy, unruly neighbors and can pass by-laws preventing the public consumption of alcohol. Answer 2 Case Study – Overview Pakistan has recently considered taxing the carbon emission from the big fossil fuel industry and reduces its negative impact on the world’s climate. This was declared in the national climate change strategy. They emphasize on the use of renewable resources. The government will â€Å"consider introducing carbon tax on the use of environmentally detrimental energy generation from fossil fuels†, said the plan, launched at an event in Islamabad. (Reuters Point Carbon) The Pakistan government in their policy announced the tax on carbon at the rate of Pakistani Rupee 25 per ton. It started from 1 July 2012 with the objective of changing the policy later to market based emission trading scheme (Gillard, 2010). Pakistani economy suffered slow-down due to the climatic changes. Climate change refers to situation that reflects the significant changes in the patters on weather conditions over the particular time period. Climate changes are caused by various factors such as solar radiation variations, biotic process and volcanic eruptions. The human activities are also responsible for the severe climatic changes that have lead to global warming (Edward Miller, 2001). These severe climatic changes have the adverse impact on the overall cycle of earth’s process. Evidence for recording the climate changes has been taken from various resources that were used to reconstruct the past climates. The changes have affected the entire world and Pakistan has f aced the significant economic impacts due to this. It has affected the infrastructure, coastal communities, and agriculture and water security in Pakistan. Carbon taxes are important for reducing the negative effects of carbon emission. Carbon taxes are formed to reduce the green house effects of gas emission through cost effective means . Carbon taxes are very regressive and impact the lower income group largely. The impact of carbon taxes can be addressed using the tax revenue for the lower income groups. These taxes provide the incentives for the firms that adopt the environment friendly approach for production process. These are also important for raising the money required for taking the initiatives to save environment. The impacts of carbon tax on the economy of Pakistan are as follows: Macro economics effects: Pakistan economy promotes the reduction in usage of carbon related energy resources for the industry purpose and switch towards the renewable energy resources. Carbon tax is the cost to the producers that use the carbon efficient energy resources. So in order to reduce the cost and increase the profit, it is important for them to shift towards the other renewable resources of energy. Carbon tax is important for reducing the tax as well as the negative impacts on the environment. (Source: Self Study) The left graphs clearly states that the tax will increase the cost of production and decrease the quantity of fuel energy. The will also lead to higher labour cost and also it will lead to increase in fuel prices. The right graph on the contrary shows the benefit of using the renewable resource of energy and increase in production level. So it is seen that carbon tax will impact the business negatively, but at the same time encourage them to use the renewable resources of energy that will have the long term positive impact on environment and business. Effects on employment: The carbon tax has the direct negative impact on the employment because it will lead to additional burden on the production cost. The trade sector will see the shift towards the non trading sector due to this. Effects on households: The household will experience the change in cost of the general commodities as the industries will include the cost of carbon tax in total cost of production. This will lead to negative impact and the household income will be reduced. Direct Action The government replaces the carbon tax with the direct action plan. The direct action plan includes the incentive program for the industries that reduce the carbon emission rate significantly (Preston, 2006). The key points of the policy are: Target of 55 reduction in carbon emission rate Scrapping the carbon tax and associated taxes Creation of green army for conducting the environment conservation work. The government released the white paper that has the details about the policy and the working of fund for emission reduction. The labor as well as the coalition supported this policy over the carbon tax. Contrary to the carbon taxes the policy emphasizes on gaining the incentives by reducing the carbon emission in environment. Policy also has the provision for compensation payment to tax payers for reducing the increase in prices. It directs the business to work towards the emission reducing projects. Pakistan is the largest contributor towards the green house gas emissions, so this policy will help the entire worlds by reducing the carbon emission without imposing any impact on the cost of production. The main feature of the direct action policy is creation of emission reduction fund, which will be $3 billion for four years. The fund will ask the industries to fill the tenders for the emission reduction projects. This will initiate the reverse auction and the industries will compete for reducing the emission rate to win the incentive from the government. The auctions will be held quarterly. The government is sure about the positive outcomes of the policy in terms of reduction in carbon emission. (Source: Self Study) The direct policy has the positive impact on the Pakistan economy. Pakistan actually has the capability of achieving more than the 5% target. Pakistan will achieve the emission reduction project by 2020 in more efficient way. It will contribute towards the global action for addressing the climate change. By reducing the emission amount the economic growth of the Pakistan is expected to be doubled in next few years. It will directly impact the long term projection of the economic growth. Since it has no cost attached to it, it will be beneficial for the business as well as the house hold income. Instead the policy rules of taking the advantage of incentive will direct the business house to reduce the carbon emission without any impact on the cost of production. It is estimated that Pakistan economy will grow by 17% with this project. (Source:Climate Change Authority, 2013) The level of the price attached to carbon with incentive plan will reduce the economic cost. There will be no cost passed to the customers in the form of goods and services. It will also regulate the direct income transfer from Pakistan for buying the additional emission from the overseas. This will also reduce the indirect cost. This will have the positive trade effect. Carbon Tax Vs Direct Action Carbon tax policy as well as the direct action policy aims towards the reduction of the carbon emission in the environment. The base is same but the approach is totally contradictory. The direct action is better than the carbon tax policy because of the below mentioned facts: Carbon tax has the cost attached to it which will in return increase the cost of production whereas the direct action has the incentive policy which encourages the industries to reduce the amount of carbon emission without any effect. Carbon tax will lead to reduction in employment opportunity due to increased labor cost whereas this will not occur in the case of direct action policy. The direct action policy has the better targets and objectives as compared to carbon taxing. The carbon tax will reduce the household income due to the increased prices of commodity whereas the direct action plan will not have the negative impact on the household income. Carbon taxing policy will lead to increase in fuel prices and the actual efficiency will be reduced whereas the direct action plan will increase the efficiency of the industry and the quality of production. The direct action policy has the clear targets in terms of reduction of carbon emission whereas it is missing in the carbon tax policy. For dealing with the negative externalities, the Government of Pakistan has taken a positive step in the form of Carbon tax. This will reduce the green house gas emission and promote the use of renewable resources. This was not only Pakistan but the climate of entire world will get the positive results. Pakistan is taking the considerable steps to reduce the carbon emission in the environment. This is because of the fact that the economy of Pakistan has suffered due to the large amount of green house gas emission. The government introduced the carbon tax and direct action policy for the reduction of carbon emission. The carbon tax policy does not get the enough success and the direct action plan replaced it successfully. By the year 2020 Pakistan is aiming at significant control over the carbon emission in the environment. Answer 3 The carbon tax is very unique in nature but it is quite effective for reducing the impact of negative externalities. The main purpose of carbon tax is to reduce the carbon dioxide emission and with this save the severe climatic changes. However this is noted that only the carbon tax cannot save the climatic change and reduce the impact of negative externalities. The Pakistan government should also make other policies to reduce the impact of carbon emission in the environment. For this purpose they must make the policies and regulation of reducing the coal usage in industry as it causes lots of pollution and also it is a non renewable resource of energy. The government should compulsorily regulate the use of renewable resources of energy that are natural and reduces the emission of green house gases. Carbon tax policy is quite cost effective for the Pakistan economy and it is quite easy to switch from the pollution taxes to direct subsidies and promotes the cleaner and greener production technologies. However the impact of these taxes totally depends on how this money is being used for the reducing the impact of negative externalities (Scott, 2005). They must be balanced by decreasing the amount of other taxes by the method of revenue recycling. The green taxes can actually help the overall economy of Pakistan provided it is used in the right direction and the taxes are imposed religiously to achieve the main objective behind them. In the nutshell, it can be said that imposing the carbon tax is a very progressive step of the Pakistan government. However along with this they should also consider the following for dealing with the negative externalities (Bonnieux, 2002): Preserving the tropical rain forests in Pakistan Limiting the public access to the farm land for their recreational purposes Preservation of wet land Following the traditional ways of farm building Implementing the price-based instruments alter the prices of goods and services to reflect their relative impact. Providing the grants to farmers under the Control of Farmyard Pollution Scheme Conclusion To conclude, negative externality is a type of economic transaction, consumer and producer are the first and second party, and the third party is comprised of organization, individual, resource or property owner that get indirectly affected due to that transaction. Pakistan Government has decided to impose the carbon tax for dealing with the situation of extreme pollution and green house gas emission through their fossil fuel industry. The level of the price attached to carbon with incentive plan will reduce the economic cost. There will be no cost passed to the customers in the form of goods and services. It will also regulate the direct income transfer from Pakistan for buying the additional emission from the overseas. Main purpose of carbon tax is to reduce the carbon dioxide emission and with this save the severe climatic changes. However this is noted that only the carbon tax cannot save the climatic change and reduce the impact of negative externalities. The Pakistan government should also make other policies to reduce the impact of carbon emission in the environment. References Bonnieux, F. and Rainelli, P.( 2002). Economics and the interface between agriculture and nature, in Brouwer, F. and Van der Straaten, J. eds, Nature and Agriculture in the European Union, Cheltenham, Edward Elgar ARTS 338.1094 P2. Caplan, Bryan(2008).Externalities. InDavid R. Henderson(ed.).Concise Encyclopedia of Economics(2nd ed.). Indianapolis:Library of Economics and Liberty.ISBN978-0865976658.OCLC237794267. Edwards, Paul Geoffrey; Miller, Clark A. (2001).Changing the atmosphere: expert knowledge and environmental governance. Cambridge, Mass: MIT Press.ISBN0-262-63219-5. Gupta, S.et al. (2007).13.2.1.2 Taxes and charges.Policies, instruments, and co-operative arrangements. Climate Change 2007: Mitigation. Contribution of Working Group III to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change (B. Metzet al. Eds.). Print version: Cambridge University Press, Cambridge, U.K., and New York, N.Y., U.S.A.. This version: IPCC website. Retrieved 2010-03-18. Hoeller, P. and M. Wallin (1991).OECD Economic Studies No. 17, Autumn 1991. Energy Prices, Taxes and Carbon Dioxide Emissions(PDF). OECD website. p.92. Retrieved 2010-04-23. J.J. Laffont(2008). externalities,The New Palgrave Dictionary of Economics, 2nd Ed.Abstract. McKibben, Bill (2011). The Global Warming Reader. New York, N.Y.:OR Books.ISBN978-1-935928-36-2. Preston, B.L.; Jones, R.N. ( 2006).Climate Change Impacts on Australia and the Benefits of Early Action to Reduce Global Greenhouse Gas Emissions. Scott, S., (2005),Fertiliser Taxes Implementation Issues, Final Report, Wexford, Environmental Protection Agency. Williams, C. (1997) Environmental victims: Arguing the costs,Environmental Values, 6:3-30. Innovation and Managing Change: ExxonMobil Innovation and Managing Change: ExxonMobil Innovation and change are the most important concepts discuss in modern dynamic business environment. The development of technology and the increasing burning needs of the people have created a dynamic environment of which the corporations may not be able to survive unless they simultaneously change their strategies with those global environmental and technological changes. This report intends to provide a detailed discussion of the management of change within Exxon Mobil Corporation (EMC) which is one of the worlds largest publicly traded international oil and gas company, providing energy that helps underpin growing economies and improve living standards around the world. My discussion mainly covers three perspectives. First, I explain the factors influencing the EMCs innovation and change strategy and then, I evaluate the importance of change to EMC and the potential problems they face when EMC implementing the change. Finally, I evaluate the effectiveness of EMCs strategy for managing change within the organization. OVERVIEW OF THE COMPANY Exxon Mobil is the worlds largest publicly traded international oil and gas company. They hold an industry-leading inventory of global oil and gas resources. They are the worlds largest refiner and marketer of petroleum products. And their chemical company ranks among the worlds largest. However they are also a technology company, applying science and innovation to find better, safer and cleaner ways to deliver the energy the world needs. EMCs organizational structure is built on a concept of global businesses and is designed to allow Exxon Mobil to compete most effectively in the ever-changing and challenging worldwide energy industry. EMC operates facilities or markets products in most of the worlds countries and explore for oil and natural gas on six continents. Exxon Mobil uses innovation and technology to deliver energy to a growing world. They explore for, produce and sell crude oil, natural gas and petroleum products. They are committed to meeting the worlds growing demand for energy in an economically, environmentally and socially responsible manner. Therefore innovation and change strategy of EMC would be the most significant factor for the future business expansion. FACTORS INFLUENCING INNOVATION AND CHANGE Factors influencing the innovation and change differ according to the business context of the organization. For example if a particular company is engaged in energy industry they may highly concern about environmental factors whatever the change they need. Because the environment has a major impact on all the product and services portfolio of EMC. Therefore it is more important to understand the context of business of which a particular corporation is engaged in before moving into a changing situation. In addition modern technological advances, cultural changes, structure of the corporation and regulatory requirements also can be identified as other factors to consider. However, there is also a need to understand the magnitude of challenge faced in trying to effect strategic change. To do this it is useful to consider the type of change required , the wider context in which the change is to occur and the specific to change that exists Following main factors can be considered as the i nfluencing factors of change. The context There is no one right formula for management of change. The success of any attempt at managing change will be dependent on the wider context in which that change is taking place. For an example managing in a small, perhaps relatively new business where a motivated team are themselves driving change, would be quite different from trying to manage change in a major corporation, or perhaps a long established public sector organization, with establish routine, formal structures and perhaps great deal of resistance to change. The contexts are completely different and the approach to managing change therefore needs to be different. [Balogan and Hope Hailey] Balogan and Hope Hailey build on this point to highlight a number of important contextual features that need to be taken into account in designing change programs. See above exhibit. It reflects few examples of contextual features and their influence on strategic change programs. The time available for change could be dramatically different. When consider EMC for example there may be new enactments from the governments for usage of energy resources and exploring energy resources. Or there may be a new alternative for fuel such as water. Then EMC need to have a rapid change. So there is no more time to waste. However there may be corporate decision and management plans for change. The management of EMC may have targeted at a kind of a change with the future forces. That can be taken a along time arena to change. No matter how significant the change, it may be that there is a need for the preservation of certain aspects of the organization, in particular those that are to do with the competences which changes need to be based. For EMC it is necessary to concern the environmental factors whatever the change they expect to see. And also there may be some competent employees and professionals to be retained in the corporation. Change may be helped if there is a diversity of experience, views and opinions within an organization. EMC has expanded their operations in six continents. So the diversity is higher than any other organization. Therefore EMC has to consider different needs of the diversified stakeholders in all over the world. The previous experience of change is also important. Therefore capability also plays an important role in change management process. EMC has demonstrated their capability in managing change with the current successful business portfolio. Capacity of the organization is also important to survive with the available resources. If a corporation has problems of lack of required resources the change will cause for a business failure. EMC has sufficient resources in all over the world. The current stage of the business life cycle in EMC has paved the way for this. The readiness of EMC is good. The management has understood the need for change. They have established them into their budgets. EMC has announced the expected change and the innovative expectation in there news article of A view to 2030. The power to change in EMC also is in a good position. The board of director consists of 11 directors of which 10 of the 11 directors on board are independent. CEO has 4 vice presidents for the decision making. Therefore EMC should understand from where the resistance is effect i.e. from top level or lower level. EMC is currently engaged in various activities such as production, exploration, refining, fuel marketing, natural gas and power marketing etc. And also it is global firm operates in six contingents with billions of employees around the world. Therefore when concern the business context of EMC it is much complex in nature. In addition the industry also is highly volatile with the development of the technology would also be significant to EMC. Culture As EMC operates in six continents this factor is highly an effect to the innovation and change strategy of EMC. EMC has to manage the stakeholders such as customers, suppliers and employees etc. in different contexts. Therefore there is a significant impact on the innovation and management strategy in order to create proper change management process. The cultural web provides a good basis of understanding the effects of cultural changes to any organization. It is a representation of the taken for granted assumptions or paradigm of an organization and the physical manifestations of organizational culture. (See below exhibit.) [Gerry Johnson Managing the strategic Change] Above all the factors are the parts of the organization culture. When consider the EMC the culture is the most significant factor as it operates in globally. Therefore it is necessary to consider the cultural changes and their effects to the modern business arena for EMC. The cultural web also can be used as a way of understanding current organizational culture and desired future culture for EMC. Environment The environment is the most significant factor influence to any corporation to their innovation and change strategy. The concepts such as environment protection, sustainable development etc. has created the concerns of various regulators to control the organizations. The nature of the business portfolio of EMC is highly linked with the environment. They explore in environment, mining and extracting from environment and finally the consumption of energy also releases the polluted air to the environment. Therefore EMC has to be highly concern about the environmental factors when they determine their changing strategies. Technology The technology is also a significant factor for the innovation and change strategy of EMC. The development of the modern technology has created a massive cost benefit opportunities to EMC. For example the mining machines can produce more efficiency than the laborers. In addition different technological developments have increasingly changed the research and development perspective of EMC. THE IMPORTANCE OF CHANGE TO EXXON MOBIL It is important to any organization to realize the need of change. The strategic change is considered at the initiation of the business portfolio and it should be evaluated by time to time ongoing basis. Change can be in any context. Therefore it is important to understand why EMC needs the change. By nature EMC engaged in energy industry. The crude oil prices and the regulatory requirements of government in different countries and the authorities may change time to time. Those external forces of change can not be predicted and also effect to whole organization. As EMC operates in diversified cultures around the world the effects of the stakeholders in different arenas are also may be demanded for change. Past experiences of change management in EMC has proved that the growth of the company depends on how quickly the company finds the innovative products. The technological advancement in modern world has changed the way of research and development. The technology has facilitated a lot for improving productivity in R D sections. Therefore EMC should be highly concern regarding the future advancements to the industry and there effect on EMC. There may be alternative substitutes in future and also there may be newer technologies for exploration, mining and other activities in the industry. Therefore change is very important to EMC. PROBLEMS OF IMPLEMENTING THE CHANGE However, even though the change is the most important thing to EMC there are several potential problems they have to be faced when they implement the change. The complexity of the geographical area is the major problem. In here EMC has to determine change strategy in order to line with the cultures, regulatory requirements and needs of the people in those countries. Some times there can be higher resistance from the above forces when we implement the change. Managing the risks from increases in global greenhouse gas emissions is an important concern for EMC, industry and governments around the world. Kurt Levins forcefield analysis provides an initial view of change problem that need to be tackled, by identifying forces for and against change. It helps to identify the driving forces and restraining forces to a particular change situation. EFFECTIVENESS OF MANAGING THE CHANGE WITHIN THE ORGANISATION The effectiveness of managing the change is depending on how management, employees and finally the organization as a whole face to the change event. In here it is most important to understand the styles and roles of change in a particular organization. Whoever is in the position of managing change needs to consider the style of management they adopt. According to the organizational context different styles are likely to be more or less appropriate. Education and communication This involves the explanation of the reasons for and means of strategic change. It might be appropriate if there is a problem in managing change based on misinformation or lack of information and if there is adequate time to invest in persuading people and give them the chance to assimilate the information. However there are problems here. Assuming that reasoned argument will overcome perhaps years of embedded assumptions about what really matters could be native specially if there is a lack of mutual trust and respect of between management and employees. Relying on processes of communication in a top down fashion may also be problematic. Change is likely to be more effective if those affected it are involved in its development and planning. This is what EMC is doing. They give the opportunity to management and employees to contribute to the change event. EMC has long term focus on their change strategy. They have taken several measures to create educated environment within the organization. EMC has continued investing heavily in math and science education in the United States. They supported initiatives that encourage students to take an active interest in careers in the math and science fields, encourage the professional development of highly qualified teachers and promote involvement of women and minorities in these subjects. Exxon Mobil has a long history of supporting and improving educational programs as an important business priority. There is a separate teachers academy for EMC to develop quality people. EMC communicates using news releases and gives the employees the opportunity to view them. Collaboration This is the method of participating in the change process is the involvement of those who will be affected by strategic change in the change agenda. For example the identification of strategic issues, the strategic decision making process, the setting of priorities and the implementing the changing event is done by the lower level. In EMC those all the parties are the contributors of the change. Its like a routine aspect but finally top level management can achieve the expected change event. Therefore the collaboration has become a way of building readiness, and capability for change. EMC has effectively collaborated with the people in order to create current expanded business portfolio in all over the world. Intervention and Direction Intervention is the coordination of and authority over processes of change by a change agent. Direction involves the use of personal managerial authority to establish a clear future strategy and how change will occur. It is essentially top down management of strategic change. It may be associated with a clear vision or strategic intent developed by someone seen as a leader in the organization. EMC has the motto of taking on the worlds toughest energy challenges. Therefore it can be understood the direction of the management for the strategic change. Coercion In its most extreme form, a directive style becomes coercion involving the imposition of change or the issuing of edicts about change. This is the explicit use of power and may be necessary if EMC is facing a crisis or a conflict of change. However it should be noted that the management change in EMC by using above techniques may be effected by the factors such as capability, time and scope of change, power structure of EMC, capacity to change etc. When it comes to consider strategic change, there is too often an overemphasis on individuals at the top of an organization. It is useful to think of change agency more broadly. Change agent is the individual or group that helps effect strategic change within an organization. When consider the top level management EMC has a number of change agent within the organization with massive experience. There are highly qualified CEO and four vise presidents for the decision making. Rex w. Tellerson Chairman and Chief Executive Officer a native of Wichita Falls, Texas, Mr. Tillerson earned a Bachelor of Science in Civil Engineering at the University of Texas at Austin before joining Exxon Company, U.S.A. in 1975 as a Production Engineer. Senior Vice President Mr. Mark Alberts born in Calgary, Alberta, Canada, and raised in Texas, Mr. Albers joined the company in 1979 and holds a bachelors degree in petroleum engineering from Texas AM University. Mr. Michel J Dolan Senior Vice President joined Mobil Oil Corporation in 1980 at the Paulsboro, New Jersey, and research laboratory. Over the next 13 years, he worked in a variety of engineering and managerial positions supporting Mobils worldwide refineries. Andrew P. Swiger is senior vice president of Exxon Mobil Corporation and a member of the corporations Management Committee. Throughout his career, Mr. Swiger has held a variety of techn ical and managerial positions in production, operations, engineering, planning and gas and power marketing. He joined the company in 1978 as an operations engineer in Morgan City, La., eventually progressing through a series of upstream staff and managerial assignments in Africa, Europe and North America. Donald D Humpheyars Senior Vice President and Treasurer a native of Tulsa, Oklahoma, Mr. Humphreys earned a Bachelor of Science in Industrial Engineering and Management from Oklahoma State University in 1971. He served in the U.S. Army from 1972-1974. He obtained an M.B.A. from the Wharton School of the University of Pennsylvania before joining Exxon Chemical Company in 1976. In 1986, after several assignments in Houston, Baton Rouge and Baytown, he transferred to Exxon Corporation in New York as Senior Financial Advisor in the Controllers Department. In 1988, he moved to Exxon Company, International as Financial Reporting Manager and later served as General Auditor. In 1990, Humph reys became Upstream Controller of Exxon Company, U.S.A. SUMMARY Innovation and change are the most important concepts discuss in modern dynamic business environment. The development of technology and the increasing burning needs of the people have created a dynamic environment of which the corporations may not be able to survive unless they simultaneously change their strategies with those global environmental and technological changes. Exxon Mobil is the worlds largest publicly traded international oil and gas company. They hold an industry-leading inventory of global oil and gas resources. They are the worlds largest refiner and marketer of petroleum products. And their chemical company ranks among the worlds largest. However they are also a technology company, applying science and innovation to find better, safer and cleaner ways to deliver the energy the world needs. Factors influencing the innovation and change differ according to the business context of the organization. Therefore it is more important to understand the context of business of which a particular corporation is engaged in before moving into a changing situation. In addition modern technological advances, cultural changes, structure of the corporation and regulatory requirements also can be identified as other factors to consider. However, there is also a need to understand the magnitude of challenge faced in trying to effect strategic change. To do this it is useful to consider the type of change required the wider context in which the change is to occur and the specific to change that exists. The factors such as context, culture, environment and technology are the most important. It is important to any organization to realize the need of change. The strategic change is considered at the initiation of the business portfolio and it should be evaluated by time to time ongoing basis. Change can be in any context. Therefore it is important to understand why EMC needs the change. By nature EMC engaged in energy industry. The crude oil prices and the regulatory requirements of government in different countries and the authorities may change time to time. Those external forces of change can not be predicted and also effect to whole organization. As EMC operates in diversified cultures around the world the effects of the stakeholders in different arenas are also may be demanded for change. Past experiences of change management in EMC has proved that the growth of the company depends on how quickly the company finds the innovative products. The technological advancement in modern world has changed the way of research and development. The technology has facilitated a lot for improving productivity in R D sections. The complexity of the geographical area is the major problem. Managing the risks from increase in global greenhouse gas emissions is a problem of EMC to consider. Forcefield analysis can be used as a good technique. The effectiveness of managing the change is depending on how management, employees and finally the organization as a whole face to the change event. In here it is most important to understand the styles and roles of change in a particular organization. Education and communication, Collaboration, Intervention and Direction, Coercion can be considered as factors affecting the effectiveness of the change within the organization. It is useful to think of change agency more broadly. Change agent is the individual or group that helps effect strategic change within an organization. When consider the top level management EMC has a number of change agent within the organization with massive experience.