Assignment 4: Merger, Acquisition, and Internatinal Strategies

Assignment 4: Merger, Acquisition, and International Strategies
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Assignment 4: Merger, Acquisition, and International Strategies
Introduction
Exxon Mobil is a US corporation that specializes in oil and gas and headquartered in Texas. The company started its operations in the year 1999, after its merger. Exxon and Mobil merged and started their operations as a single entity with the aim of increasing their output and revenue in the long run. The company is known to be the 5th largest in terms of revenue and 2nd largest traded company in the world. Zippo manufacturing company is also a US company which produces Zippo lighter to their consumers. The company is headquartered in Pennsylvania, and has never merged with any other company. The company operates within the US while selling their reusable lighters to the local market.
Exxon Mobil Merger
Exxon Mobile’s products are distributed around the globe under different brands like Esso, Mobil and Exxon. Mobil is the corporation’s brand in New England, Florida, the Great Lakes and California. Exxon on the other hand is the main brand in other parts of the US. Exxon Mobil came as a result of a merger between Exxon and Mobil which were major companies dealing in oil production. The two companies emerged from John D. Rockefeller and standard oil which started their operations in the year 1870. The company was later dissolved after a public outcry during the Ida M. Tarbell’s publication. The government through the Supreme Court decided that the corporation should be dissolved.

In the year 1998, Mobil and Exxon merged under an agreement that cost the companies $73.7 to form Exxon Mobil Corp. Such a merger was the largest in the world with final submissions done in 1999. In the year 2000 the corporation sold one refinery in California together with other 340 branded centers of Exxon. The company currently supplies to more than 700 Mobil retail outlets in the region.
The merger was necessary to the company and the government as they companies were providing essential products to the public. The need for oil is often desired high with the industry being volatile in many cases. The merger meant a secure position in most places with oil and gas discoveries. They were also able to make investments that were large which benefitted them through capital productions and operating synergies.
The merger between the two corporations was a decision that was wise as it led to an increase in the production levels of oil and gas. The efficiency of production and supply of the corporation’s products was also increased as they made use of their combined efforts and market capitalization to ensure increased sales capabilities. The companies made $2.8 billion in their first year of operation through their operating synergies. This was not anticipated as the merged companies thought of getting their full benefits after three years of operation. Exxon Mobil thought that their benefits would have offset by $2 billion one-time costs after the integration. They had also planned to cut down on their human capital by 9000; this never happened as they regained their ground and made increased profits from the sells due to the merger. One year after the merger the pre-tax annual savings stood at a high of $3.8 billion a figure that was not anticipated by the companies.
The merger by the two companies made them utilize their capital more efficiently as opposed to if they worked singly. Exxon Mobil experienced better management practices which were shared amongst them. They had improvements in the areas of cost savings and scale efficiency. The assets and businesses of Exxon and Mobil became complimentary, a fact that made them realize high profits and investments within a short period. In the production and exploration of oil sector the company has a strong presence in various regions including Russia, North America, West Africa and the Caspian region. They have little overlap in their business operations a fact that has helped them secure more contacts from many other regions around the world. Exxon Mobil has a high presence in the production of natural gas which has given the company sales of more than 14 bcfd. Mobil brought about the production of LNG which was new to Exxon.
The merger also brought about technology synergies that were not present. The companies had technological proprietary in the areas of steel, LNG, heavy oil and the processing of gas to liquids. In their downstream, the companies were focused on chemical catalysts and refining processes. The lube stock of Exxon fitted well with the management operations of Mobil in the area of lube marketing. Generally, the merger between Exxon and Mobil was advantageous as it made them become dominant and able to provide quality products due to their combined efforts. The decision for the merger was thus wise as it saw an increase in revenue and overall investment capabilities.
New Merger with Zippo Manufacturing Company
Zippo manufacturing company produces reusable lighters of different designs for its US consumers. The company started its operations in the year 1932 and started producing lighters in the year 1933. The operations of the company were inspired by IMCO from Australia, which used to produce reusable lighters for its market in Australia. The company should merge with IMCO Australia which has since closed down its lighter production due to financial constraints. The merging will be an important facet for the two companies because they have experience in the industry and production of lighters of different types. IMCO Australia which has had different its operations in other parts of the world will introduce Zippo into the new markets and ensure increased sales for their products. The merger will also ensure sharing of ideas and management experiences which are always essential when dealing with two companies from the same industry.
IMCO Australia will be a profitable target as there will be synergy that will ensure increased power surplus that will make them have high performance and efficiency. The two companies will come together and support one another in their different areas of operation and this will lead to increased profit levels and high work performance. The companies will also enjoy cost efficiency as there will be a higher presence of bulk orders due to the combination. This is because of the increased purchasing power that will be created after the merger due to the negotiations done on different bulk orders. Staff reduction due to the merger can lead to reduced costs and increased profit levels. An increase in the level of production in the company will also lead to low costs of production and this will lead to increased levels of economies of scale.
The mergers will lead to maintenance of competitive advantage due to the many strategies and issues that can be well understood when the talents and resources of two companies are combined. It is also vital to note that when two companies are merged they become strong and easily network by making improvements in their market research capabilities. Such provisions lead to new opportunities in the business and the exploration of new business possibilities (Gugler, 2003).
International business-level strategy and international corporate-level strategy of Exxon Mobil
Exxon Mobil is making use of different international and corporate level strategies to ensure continuity and profits for their organization. The company makes use of such strategies to ensure efficient transactions and increased profits. The company often makes use of international partners in the chain of supply and distribution to ensure easy penetration to different markets. They make use of such strategies because of the different modes of operation that are available among different countries. Their commercial success has been through understanding the different international ties, legal systems and cultures for purposes of ensuring easy business deals.
The company is using multi-domestic strategy that ensures responsiveness to the local people who are found in other markets outside the US. The company however needs to explore new markets through the use of agents from different countries for purposes of entering new markets that are remote.
The corporate strategy of the company is through diversification where they find new opportunities that are outside the provisions of the company. They do this through their contribution in providing efficient services and products that are competitive. They also ensure price regulations which make common clients from the region to use their products and services. Through local acceptance the international market can also decide to make use of the provisions without any problems. The company however needs to provide products and services that meet the needs of the clients in accordance to the different region. This is because different regions have varied needs and cultures which often need to be met by the manufacturer (Kale, 2002).
Business-level strategy and one corporate-level strategy for Zippo
One business-level strategy that can be used by the organization can be cost leadership. This is because most organizations often make prices for purposes of increasing their customer base within a short period. The use of price as a factor helps organizations to ensure efficiency so that they can have a margin that will make them have average returns in the long run (Williams, 2005). Price makes customers to purchase the products of an organization at different levels. The strategy is better because the products of the company are known to be standardized.
The company can also use the corporate strategy of diversification in the event of selling and producing their products. They also need to find new opportunities and products that are able to increase the company’s presence not only in the US, but also around the world. Diversification is vital for the organization as it will ensure increased production and sales within a short period.
Conclusion
The companies can enjoy economies of scale and higher profits if they make use of mergers instead of operating as single entities. With all the benefits the mergers will be able to increase their presence in other regions around the world and also deal with the tough competition that might be as a result of new markets. They will also be in a position to use technological advancements that are available in other regions. The companies will increase their presence and profits in the long run.

References
Gugler, K., Mueller, D. C., Yurtoglu, B. B., & Zulehner, C. (2003). The effects of mergers: An international comparison. International Journal of Industrial Organization, 21(5), 625-653.
Kale, M. M., & Chipperfield, A. J. (2002). Reconfigurable flight control strategies using model predictive control. Proceedings of the IEEE Internatinal Symposium on Intelligent Control.Williams, M. C. (2005). The Realist Tradition and the Limits of Internatinal Relations. International Organization (p. 236). Cambridge University Press.