Strategies in merger and acquisitions

A worldwide business practice has been more well-known since the beginning of globalization. Globalization, which improved the role that MNCs play in international economies, was made possible by improvements and inventions in worldwide transportation and communication. Companies have mostly used mergers and acquisitions as survival tactics in the fiercely competitive global market. Fusion of the two entities may be part of the merger. The combination of Chevron Corporation and Exxon Mobil is among the mergers that have taught people how to get a competitive edge. To revamp their entrepreneurial endeavors, the businesses amalgamated., and a third corporation are all evaluated in this test for their corporate and business practices.ExxonMobil and a company that has never merged since it was formed, Rosebud Perfume Company.

An International Company that Merged: Exxon and Mobil Merger

Exxon and Mobil merged on 30th November 1999 to address the issues that were emerging in the oil industry of which they were members (Levy & Kolk, 2002). More specifically, being small players in the industry with relatively small capital, it was significantly hard for Mobil and Exxon companies to survive. Merging was easy for the two companies because of their attributes. For instance, their technologies were complementary; While Exxon Corporation had a deep sea exploration strategy, Mobil had the technologies of exploring oil on land. The merger, therefore, paved way for various geographical opportunities. There are several reasons that encouraged the companies to merge. For instance, by doing so, the two companies could easily explore, and export petroleum products in a profitable manner as a result of reduced production costs.

In addition, the union could allow the companies to improve their performance through regional technological integration. Increased geographical reach was the other strategy for the union. Previously, both of them had a moderate global reach. By forming a merger, the companies could expand their operation to West. Africa, South America, Russia, Asia and Canada. Additionally, cost reduction could be enhanced by reducing duplication of tasks. Each of the two companies was assigned a task of handling the production process taking place in that place.

Justification for the Merger. Forming the merger was a sound idea based on the business environment in which the two enterprises operate. Globalization gave birth to the explosion of competition in the local and international market. To the present, most multinationals are always in a rush to capitalize on available opportunities and control a large proportion of the market. The petroleum industry is one of the most competitive enterprises globally, accounting for 20% of the global trade volume. The industry is controlled by cartels such as the organization of Petroleum Exporting Countries (OPEC) that controls approximately 60% of the oil sector in the world. The competitive advantage of the OPEC countries is that they have large deposits of oil hence can produce and sell it cheaply but profitably (Griffin & Teece, 2016). As a private actor, it was significantly expensive for either of the companies to explore and control oil because they relied on contracts. The merger made the two companies a bigger and stronger company with the capability of investing in expensive and high-risk enterprises with high returns.

Transforming the initial structure by expanding it could help the companies to suit the changing needs of the marketplace to survive. The goal was achieved by merging it made them one of the largest petroleum company around the world with numerous resources. In addition, both companies were already established in the world. Opting for a strategy that could enhance efficiency in management and increase geographical coverage was therefore sound. Prior to the merger, it was hard for either of the companies the venture into global territories. A year before the merger, both of them had established well in America’s energy industry. Undoubtedly, combining their infrastructure, technologies and other resources could increase their capacity to initiate bigger projects than before when they operated separately. By utilizing the best strategies business, technologies, and strategies, the two companies began concentrating on areas that had the highest production potential to maximize their revenues.

2. A company that has not been involved in Acquisitions

Auburn Leather Company The company was formed in 1863. To the present, the company has been hiring craftsmen to cultivate passion, knowledge, and skills that are necessary for the production of high-quality leather in America. The Company uses dairy cow hides to deliver leather with optimum strength, color, and crocking resistance. The company provides leather of varying varieties. The company offers contract manufacturing services that provide customers with tailor-made, customer die-cut parts for ascents for footwear, furniture trims and other applications of design.

The Best Company to Merge with; Gucci

Gucci Company is an Italian brand that sells fashion products made from leather. The company was formed in 1921 and is well established around the world. It sells both men and women products and operates approximately 300 stores globally(Chevalier & Mazzalovo,2008). In addition, it has a well-established customer service which listens and responds to product complaints. Therefore, there will be harmonious operation after the merger because both companies are complementary goods. Thirdly, the company has well-established customer service across the world including the markets with large populations such as China. Therefore, with the merger, Rosebud will not only access a large market but also learn what different customers need and respond appropriately. Gucci has also partnered with automobile companies such as AMC to offer a unique luxury trim package. To the present, it is one of the best-selling Italian Brand. By merging with one of the most prosperous leather companies around the world, Auburn leather will become a global brand and increase its revenues significantly.

3. ExxonMobil Business and Corporate Strategies, and Recommendations

Corporate Level Strategies

The business model of ExxonMobil seeks to achieve excellence in the company’s daily operations with emphasis on generating an outstanding cash flow and creation of shareholder value that is long-term. Ideally, ExxonMobil seeks to achieve the goals by improving the gas and oil value chain through lowering upstream costs and boosting oil production aggressively. ExxonMobil also seeks to enhance safety at every level of its operations to ensure every stakeholder takes necessary measures to facilitate safety and health of the surrounding. It also aims at conducting its business in a manner that is compatible with the community’s environmental and economic needs. The company acknowledges that successful improvement of local business environments and empowerment of communities is enhanced by research on environmental protection through innovation and invention in technology.

ExxonMobil also aims at maintaining a sound financial position by recognizing its financial strength and assigning the highest credit rating to its financial obligations. It also embarks on disciplined investing which incorporates careful assessments investments over a range of potential market conditions and across different time horizons and emphasis on opportunities that improve shareholder value in the long-term shareholder value.

Recommendation for Corporate level Strategy

ExxonMobil has successfully merged to create an international brand.it has also become increasingly competitive. However, there is a risk of low integration among components. To ensure the merger remains sustainable, it is important to keep employees engaged by building a relationship between them and the company. Being a global enterprise, the company culture is heterogeneous. ExxonMobil should create a strong engagement plan to unite people and enable the enterprise to realize the value of the merger in the long run.

Business Level Strategy

ExxonMobil aims at providing superior products and services to customers by attracting and retaining its exceptional workforce. Employees that have the best leadership and technical capabilities are preferred. The company emphasizes merit and long-term career development. Moreover, there is the emphasis on creating diversity in the workforce. Such workforce enhances creativity within the company to ensure customers are provided with superior services. In addition, the company invests in research to invent products and strategies of producing superior products.

Recommendation

The oil industry products are close substitutes. It is because of that attribute that the industry is significantly competitive. To edge out its competitors, Exxon Mobil should invent products that are superior to those of its competitors. The products should be hard to duplicate. The new product can make the brand more popular in the world, which will, in turn, translate to higher revenue growth.

4. Auburn Leather Business and Corporate Strategies and Recommendations

The primary strategies used by the company is ensuring full control of its supply chain from the process of initial development, selecting raw material, coloring, tanning, cutting and testing to ensure that only the standard quality of each product reaches the customer. Auburn Leather Company also invests in people. For instance, it has retained a veteran team at the company’s front office enriches the company’s production with knowledge and experience to enable the company to understand and work with leather and other global enterprises that source Auburn leather.

Recommendation

Auburn primarily emphasizes on footwear. However, leather can be used in the production of other valuables such as bags and belts. Other global brands have increased revenues significantly by diversifying their products. Therefore, Auburn Leather Company should invest in research to establish other alternative leather products that it can manufacture to cover a wider market. More so, it can minimize the risk of being pushed out of the market in case another company that produces substitutes of its current products enters the market.

Business Strategies

The company manufactures leather that suits different customer qualities with different tanning formulas. It is also specialized in footwear and laces that capture a variety of customers including those that like slippers, boots, and traditional boat shoes that are visually appealing. A full array of leather options is tailored to meet the performance needs and style of each customer. The company has also invested in customer relationships to ensure excellent delivery of products and services to the customers.

Recommendation

Emphasis on an experience of veterans and utilization of dairy-cow hides alone to manufacture leather is risky because it might fail to pay attention to fashion, which is a significant driver of the global apparel industry. Ideally, it demonstrates the company’s rigidity in a highly dynamic world. Rather than relying on the knowledge of the veterans in the manufacture of leather products, the company can resort to acquiring information from other sources to produce leather goods that meet the customer needs.

References

Chevalier, M., & Mazzalovo, G. (2008). Luxury brand management: a world of privilege. John Wiley & Sons.

Griffin, J. M., & Teece, D. J. (2016). OPEC behaviour and world oil prices. Routledge.

Levy, D. L., & Kolk, A. (2002). Strategic responses to global climate change: Conflicting pressures on multinationals in the oil industry. Business and Politics, 4(3), 275-300.