Exxon Mobil Competitive Advantage

Today ExxonMobil is largest global publicly held Oil and Gas Company. Over a span of 125 years company transformed from a regional retailer of kerosene in the U.S. into world`s biggest global petrochemical organization. Nowadays it carries on business in majority of countries and mostly represented by their well known brand names: Mobil, Exxon and Esso.

ExxonMobil is a major integrated oil and gas company with operations in oil and gas exploration and production, refining, and marketing oil and chemicals. Besides, it produces products that lead current transportation, supplies cities with electricity, facilitates industry and results in production of thousands of consumer goods by supplying petrochemical building blocks. Competitive advantage

ExxonMobil is also one of the largest among the six big non-state owned, vertically integrated oil companies, popularly known as “Big Oil” companies (Royal Dutch Shell, BP, ConocoPhillips, Chevron, and Total S.A.).

Most of the major traditional oil producing fields were discovered decades ago and the world conventional oil reserves are depleting. Relative finding of new fields is slow and as a result, the industry is consolidating, primarily through asset acquisition and through mergers.

In the period 1998-2001 major mergers took place in the oil industry. Merger of Exxon and Mobil was not an exception. Today Exxon Mobil is one of the biggest oil and gas companies in the world that has appeared in 1999. The most famous of its brands are Exxon, Esso and Mobil, under which are produced motor oil and other lubricants.

There are several reasons of why merger activities appeared in the world between 1994 and 2000. Oil price instability and as a response organizational structure changes in oil companies, will to increase efficiency and to change cost structures – all these has led to mergers in oil industry. Technological changes, globalization of markets, intensification of the forms and sources of competition leading to deregulation in major industries, changing dynamics of financial markets should be added to the reasons of mergers (Weston, 2002,

Also merger of both companies had an economic sense. For instance, as Weston mentioned in his paper -“adjusted by the Dow Jones Major World Oil Companies Index (DJWDOIL), the cumulative return for the 11 trading days prior and through the announcement date of 12/1/98 was 14.8% for Mobil (MOB), and -0.5% for Exxon (XON). By the tenth trading day after the merger announcement, the cumulative adjusted returns for Mobil were 20.6% and for Exxon 3.1% (Weston, 2002, p.9.).”

Both companies have gained from merger $ 34.1 Billion, respectively Exxon portion 70% and Mobil’s portion 30%. Besides, “the Mobil $10.2 billion share of the estimated value increase, combined with the $15.5 billion premium, represents a total gain of $25.7 billion to its shareholders” (Weston, 2002,