Every organization experiences stress and difficulty in coping with change. Lack of innovation from within is widely recognized as one of the critical problems facing businesses today in the United States and Canada. To be successful, organizations must embrace many types of change.

Organizational change is highly important and history is replete with examples of companies that change successfully, and are profitable and admired. Some examples are General Electric, Hewlett Packard and Motorola (Daft, 1997; Wall & Wall, 1995).

Strategic change is one of the types of organizational change and is different from others in its outlook, goals and method of initiation and implementation. Franchising, mergers and acquisitions, partnerships and joint venture alliances are some examples of strategic changes. In this paper, we begin by defining strategic change and its differences from other types of changes that may take place within an organization. We delve deeper into the process of strategic change and how companies go about it. Planning and analysis are key components of strategic change, so we specifically look at Porter’s five force model and a study of the various environments that must be analyzed to successfully plan and implement change (Bovee, Thill, Wood & Dovel, 2000; Hax & Majluf, 1996; Porter, 1996).

After that, we look at ExxonMobil’s merger of 1999 as a classic example of a strategic change. We justify why it is a strategic change and not any other type. We also specify what the key motivation for this merger was by presenting a brief background of other merger and acquisition activity in the oil industry during that time period. The success of this merger is the last subject, after which we conclude the paper.

Strategic Change:

Organizational change is defined as the adoption of a new idea or behavior by an organization. In today’s highly complex world, organizations need to continuously adapt to new situations if they are to survive and prosper. The current trend is toward development of the learning organization, which engages everyone in problem solving and continuous improvement based on the lessons of experience.

The interacting systems which make up the learning organization resemble a web in which each element responds to and influences every other element. Leadership provides vision for development of strategies and serves as a crucial support function for empowerment of employees, the determination of organizational design, and the extent of openness in information sharing. Empowerment liberates employees but also places upon them the added responsibilities of working collaboratively, accepting greater leadership roles and participating in strategy to benefit the entire organization. Defining culture demands the rethinking of roles, processes and values, breaking down barriers that have separated departments so that everyone shares information and works together.

Information sharing requires adjustments on the parts of managers for the inclusion of employees, suppliers and customers, often necessitating cultural and structural changes. Strategy is likewise linked to structure and culture as the organization changes its fundamental way of doing business and allows strategies initiatives to flow bottom up as well as top down (Glueck, 1980; Thompson & Strickland, 1996; David, 1995).

A strategic change is only one of the many types of organizational changes, the most prominent of which are technology changes, new-product changes and culture/people changes. These are different from each other but changes in one part may affect other parts of an organization: a new product may require changes in technology, and a new technology may require new people skills and new structure (Davidson, 1995).

A Strategic change, however, is a planned change which is related to the long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of courses of action, and the allocation of resources necessary for carrying out these goals (Quinn, 1980).

It is different from other types of changes in many ways. A technology change is different because that is related to the organization’s production process – how the organization does its work. They are designed to make the production of a product or service more efficient. The technology change is bottom-up. A brief digression over here is necessary to fully understand the difference between bottom-up and top-down change (Quinn, 1980; Steiner, 1979).

Generally, a company can take two main approaches to change: top-down change or bottom-up change. With top-down change, a strong CEO or a top management team analyzes how to alter strategy and structure, recommends a course of action and then moves quickly to implement change in the organization. The emphasis is on speed of response and management of problems as they occur. Bottom-up change is much more gradual. Top management consults with managers at all levels in the organization. Then, over time, it develops a detailed plan for change, with a timetable of events and stages that the company will go through. The emphasis in bottom-up change is on participation and on keeping people informed about the situation, so that uncertainty is minimized (Quinn, 1980; Hax, 1988).

Hence, a technology change is bottom-up meaning ideas are initiated at lower organization levels and then channeled upward for approval. Another organizational change which is different from strategic change is a new-product change which is a change in the organization’s product or service output. This is neither bottom-up or top-down, rather, it requires expertise and cooperation among many departments simultaneously, and follows the horizontal linkage model. Strategic changes are different from these other changes because firstly, they are very long-term in nature and require rational planning to be an essential component of the process. Secondly, they are mostly top-down where the initiation of the idea occurs at the upper level and is then implemented downward (Daft, 1997; D’Aveni, 1994; Drucker, 1995).

The process of strategic change is initiated when managers sense a need for change due to a performance gap – a disparity between existing and desired performance levels. The performance gap may occur because current performances are not up to standard or because a new idea or structure could improve current performance (Hill & Jones, 1995).

After the need for change has been perceived, the next part of the change process is initiating change, a truly critical aspect of change management. In this part, it is integral to conduct a detailed analysis of the internal and external environment which the organization is a part of. There exist a lot of tools which are used for such an analysis, the Porter’s five force model is a prominent one (Hill & Jones, 1995; Mintzberg, 1994).

Michael E. Porter of the Harvard School of Business Administration developed a framework which helps managers with the task of analyzing the competitive forces in an industry in order to identify the opportunities and threats confronting a company. this model forces on five forces that shape competition within an industry: (1) the risk of new entry by potential competitors, (2) the degree of rivalry among established companies within an industry, (3) the bargaining power of buyers, (4) the bargaining power of suppliers and (5) the closeness of substitutes to an industry’s products (Hill & Jones, 1995).

Porter argues that the stronger each of these forces, the more limited the ability of established companies to raise price and earn greater profits. Within Porter’s framework, a strong competitive force can be regarded as a threat since it depresses profits. A weak competitive force can be viewed as an opportunity, for it allows a company to earn greater profits. Because of factors beyond a company’s direct control, such as industry evolution, the strength of the five forces may change over time. In such circumstances, the task of strategic managers is to recognize opportunities and threats and formulate appropriate strategic responses. In addition, it is possible for a company, through its choice of strategy, to alter the strength of one or more of the five forces to its advantage. Hence, Porter’s model of five competitive forces is a very useful tool for strategic managers and is very useful when analyzing a situation which might demand change (Hill & Jones, 1995; Breslow, 1998; Byrne, 1996).

Another tool for analyzing the situation and the need for change is when strategic managers consider the following factors:

The Legal-Political Environment:

Businesses must deal with unfamiliar political systems when they go international, as well as with more government supervision and regulation. Some of the major legal-political concerns affecting international businesses are political risk, political instability and laws and regulations.

A company’s political risk is defined as its risk of loss of assets, earning power, or managerial control due to politically based events or actions by host governments. Political risk includes government takeovers of property and acts of violence directed against a firm’s properties or employees.
Another frequently cited problem for international companies is political instability, which includes riots, revolutions, civil disorders and frequent changes of government. Political instability increases uncertainty. And although most companies would prefer to do business in stable countries, some of the greatest growth opportunities lie in areas characterized by instability (Adamson & Marks, 2001).

Government laws and regulations differ from country to country and make manufacturing and sales a true challenge for international firms. Host governments have myriad laws concerning libel statutes, consumer protection, information and labeling, employment and safety, and wages. International companies must learn these rules and regulations and abide by them. The most visible changes in legal-political factors grow out of international trade agreements and the emerging international trade alliance system. For example, the impact of the General Agreement on Tariffs and Trade (GATT), the European Union (EU), and the North American Free Trade Agreement (NAFTA) was enormous for strategic planners and managers as it changed the very environment the business operated in (Daft, 1997).

The Economic Environment:

The economic environment represents the economic conditions in the country where the organization operates. This part of the environment includes such factors as economic development, infrastructure, resource and product markets, exchange rates; and inflation, interest rates and economic growth.

Economic development differs widely among countries and regions of the world. Countries can be categorized as either developing or developed and the criterion used to classify countries as such is per-capita income. Infrastructure also needs to be considered which is the physical facilities of a country which support economic activities. This includes transportation facilities such as airports, highways, and railroads; energy-producing facilities such as utilities and power plants; and communication facilities such as telephone lines and radio stations. Resource and product markets are also important. Aside from that, exchange rates also deeply impact a company’s strategic plans and count for a lot during any situation analysis for change plans.

The socio-cultural environment also plays an important role and must be analyzed. Social values include power distance, uncertainty avoidance, individualism and collectivism and masculinity/femininity. Social values influence organizational functioning and management styles.

All the above factors have to be considered and a thorough analysis has to be conducted for a strategic change to be successful. Through the above analysis, once the problem and internal/external situation has been identified, management must determine the ideal future state of the company, that is, how it should change the strategy and structure. Them, the obstacles to change must be determines. Strategic managers must analyze the factors that are causing organizational inertia and preventing the company from reaching its ideal future state. Obstacles to change can be found at four levels in the organization: corporate, divisional, functional and individual (Robert, 1993).

Implementing change raises several questions: for instance, who should actually carry out the change: internal managers or external consultants? These and other concerns have to be satisfied to introduce and manage change. The last step in the strategic change process is to evaluate the effects of the changes in strategy and structure on organizational performance. A company must compare the way it operates after implementing change with the way it operated before. Managers use indices such as stock market price or market share to assess the effects of change in strategy (Hrebiniak & Joyce, 1984).

ExxonMobil and Strategic Change:

Mobil Chemical Company was established in 1960 and by 1999, it was a strong name in the industry. Its principal products included basic olefins and aromatics, ethylene glycol and polyethylene. The company produced synthetic lube base stocks as well as lube additives, propylene packaging films and catalysts. It enjoyed the benefits of having manufacturing facilities in 10 countries (Holmstrom & Kaplan, 2001).

Exxon Chemical Company became a worldwide organization in 1965 and in 1999 was a major producer and marketer of olefins, aromatics, polyethylene and polypropylene. Its expertise did not stop here as it also had specialty lines such as elastomers, plasticizers, solvents, process fluids, oxo alcohols and adhesive resins. It had the reputation for excelling in metallocene catalyst technology to make unique polymers with improved performance. Its manufacturing facilities were located in 24 countries.

Exxon and Mobil Corporation merged to combine there operations in 1999, to emerge as ExxonMobil Corporation. The top management hoped to combine their businesses into the largest U.S.-based company of any type and the largest non-government oil company in the world. The merged company expects that the scale of the worldwide near-term cost savings and the long-term strategic benefits will most probably exceed those announced in previous years. Also, the merger will allow ExxonMobil to compete more effectively with the recently combined multinational oil companies and the large state-owned oil companies that are rapidly expanding outside their home areas.

This was a strategic change because the company had its business strategy at the root of the change – it wanted to enter new markets and expand the size of its operations. These are the very basic characteristics of a strategic change. The management had conducted a thorough analysis of the competitive forces in the industry. In fact, sources at Exxon and Mobil said that changes in the oil industry and the need to reduce costs in the face of low prices were two important factors in the merger. In addition to the growth of state-owned oil companies, the changes include the emergence of low-cost independent refiners and marketers in U.S. markets (Cibin & Grant, 1996; Davies, 2000).

Mobil Corp. Chairman Lucio A. Noto said that Mobil had already reduced its costs by $4 billion but if a merger did not take place, future savings would be very hard to achieve. He said, “now we're getting down to muscle and not fat.” Strategic changes are also classified as ways of reducing costs. Mergers generally are effective ways of doing that because the new resources which companies share often cuts costs significantly (Davies, 2000).

The merger makes ExxonMobil the undisputed leader in each of its world-class businesses and strengthens its proprietary technology leadership. Together, both conduct business in about 200 countries and have over 200 years of experience. There is no question they have established a new definition for ‘efficiency’ and ‘world-class scale’ (Davies, 2000; Mergers and Acquisitions).

The expansion of business operations – another trademark of strategic change – was also present in this example as with the merger, ExxonMobil acquired a broader portfolio of opportunities in attractive upstream areas and high-growth markets and businesses worldwide. It became able to optimize its choices to further improve returns. Each of its businesses began executing their plans to capture these opportunities (MERGERS Why most big deals don’t pay off).

Strategic change is also marked by exhaustive long-term projections. ExxonMobil had a very extensive inventory of upstream development projects even before the merger but based on the development plans put forward with the merger, liquids and natural gas production was expected to grow by about three percent per year through 2005. new geographical markets were also expected to be covered and key growth areas included the deepwater Gulf of Mexico, offshore eastern Canada, West Africa, the Caspian, South America and the Middle East. Beyond 2005, growth is expected to increase based on the numerous development projects currently in the design and planning stages (U.S. Energy Information Administration).

As for the downstream, the strategy was to improve returns through self-help initiatives and profitable growth. Focused marketing programs and customer-focused strategies were to be implemented for ExxonMobil Corporation to make it truly the leader in its industry.

This was a strategic change also because both companies were distinguished in their own right and both joined hands to become a strong force in this highly comeptitve industry. Technology had always been a long-standing core strength of both companies and differentiated them from competition. It was unanticipated but a much appreciated result of the merger when it was discovered that the technology programs of the two companies were far more complementary than had been assumed. Consequently, cross application benefits exceeding $1 billion were projected for the five years after 1999 (U.S. Energy Information Administration).

The fact that ExxonMobil's strong first half earnings generated significant cash flow, with a first-half cash surplus of more than $8 billion made it clear that the company had definitely performed a thorough analysis of its external environment and then ventured in to this alliance. This surplus allowed ExxonMobil's net debt to be reduced to the same level as Exxon's pre-merger and resulted in a net debt to capital ratio of just over 10 percent. This put the company in a very strong financial position with significant flexibility (U.S. Energy Information Administration).

All strategic decisions were taken prior to the merger and all possible pitfalls considered. The capital spending program for 2000 was forecast to be between $11 and $12 billion and this reflected the completion of several major upstream and chemical projects, lower lease bonus payments this year and selectivity/efficiency benefits in areas like exploration (U.S. Energy Information Administration).

The change was also a top-down one, which is highly characteristic of strategic changes. According to Exxon Corporation Chairman Lee R. Raymond, “In putting together the merger, we have not lost sight of what has and will continue to differentiate ExxonMobil from competition. Our model calls for ExxonMobil to have a leadership position in all core businesses and technology. It demands flawless execution in our base operations and rigorous discipline in selecting and implementing projects. By combining these priorities with an efficient corporate and financial structure, we expect to continue to produce superior business results and strong returns to our shareholder” (Holmstrom & Kaplan, 2001; Pare, 1994)

Another model of corporate strategy which can be applied to the ExxonMobil merger is the BCG matrix. It organizes businesses along two dimensions – business growth rate and market share. Business growth rate pertains to how rapidly the entire industry is increasing. Market share defines whether a business has a larger or smaller share than competitors. The combinations of high and low market share and high and low business growth, provide four categories for a corporate portfolio: star, question mark, cash cow and dog. The ExxonMobil merger was a way for both companies to add a Star business unit to their portfolio, which is visible, attractive and will generate profits and positive cash flows even as the industry matures and market growth slows (Porter, 1980; Porter 1985).

Key motivation and drivers of ExxonMobil merger:

The high level of merger activities throughout the world between 1994 and 2000 reflected major change forces. These shocks included technological changes, globalization of markets, intensification of the forms and sources of competition leading to deregulation in major industries, and the changing dynamics of financial markets.

Mergers and restructuring in the oil industry reflected these broader forces as well as its own characteristics.

The oil industry is large in size and in challenges. In recent decades, most new major reserves have been discovered outside the United States. Potentials for future reserve additions are in countries with considerable business and political risks. The prices of crude oil and oil products have historically been subject to wide fluctuations. The relative advantages of operations integrated over exploration, production, refining, and marketing have changed. Intermediate markets have developed along the value chain. Spot, forward and futures markets have become more active and more popular as means of hedge trading. The reduced costs of information have resulted in lowered transaction costs. Barriers to entry have fallen and new specialist firms have emerged in most segments of the value chain (Davies, 2000; Jacoby, 1974).

The ownership of oil and oil reserves has long been a powerful force in the economic, political, and military relationships among nations (Jacoby, 1974; Yergin, 1993). Repeated oil price shocks have caused the oil industry to engage in a wide range of adjustment responses. Substantial merger activity took place between 1980 and 1985 (Ruback, 1983).

Diversification efforts into unrelated activities were unsuccessful. Restructuring efforts sought to lower operating costs.
It was during 1998 and until 2001 that major horizontal mergers took place. The BPAmoco merger (announced on 8/11/98) projected $2 billion in savings, stimulating other oil companies to seek improvements in operations. The Exxon-Mobil combination was announced on 12/1/98. In December 1998, the French oil firm Total (founded in 1924 as Compagnie Française des Pétroles) announced the acquisition of PetroFina, a large Belgian oil company. On 7/5/99, the new TotalFina began a $43 billion hostile bid for the former state-owned Elf Aquitaine; the deal was completed at a price of $48.8 billion and became the fourth largest world oil company. On 4/1/99, an agreement was reached for BP Amoco to acquire Arco following negotiations initiated by Arco’s management. The U.S.

Federal Trade Commission (FTC) required that Arco sell its Cushing, Oklahoma operations and its Alaskan crude-oil assets (Phillips Petroleum became the buyer). After rejecting a merger proposal from Chevron in June 1999, Texaco agreed to a takeover announced 10/16/00. In October 1998, DuPont did an equity carve-out of 30% of Conoco; the remaining 70% was spun-off to shareholders in August 1999. On 5/29/01, Conoco purchased Gulf Canada Resources. Phillips Petroleum acquired Tosco, the largest U.S. independent refiner, on 2/4/01. On 11/18/01, Phillips and Conoco agreed on a “merger of equals”; ConocoPhillips would become the world’s sixth-largest oil and gas company based on reserves (Mitchell & Mulherin, 1996; Rock, 1988).

The M&A activity of the oil industry can be viewed as a response to price instability. Oil firms sought to invest in new technologies to reduce costs. Previous restructuring efforts and improvements in technologies had lowered costs to $16 to $18 per barrel. Oil prices declined to $9 per barrel in late 1998. Thus, the overriding objective for the mergers beginning in 1998 was to further increase efficiencies to lower breakeven levels toward the $11 to $12 per barrel range (Roeber, 1994; Mitchell & Mulherin, 1996; Holmstrom, & Kaplan, 2001; Ruback, 1992).

The motivations for the Exxon-Mobil merger, completed on 11/30/99, reflect the industry forces described above. By combining complementary assets, Exxon-Mobil would have a stronger presence in the regions of the world with the highest potential for future oil and gas discoveries. The combined company would also be in a stronger position to invest in programs involving large outlays with high prospective risks and returns.

Near term operating synergies of $2.8 billion were predicted. Two-thirds of the benefits would come from eliminating duplicate facilities and excess capacity. It was expected that the combined general and administrative costs would also be reduced. Additional synergy benefits would come from applying each company’s best business practices across their worldwide operations. In a news release on 8/1/00, ExxonMobil reported that synergies had reached $4.6 billion. Analyst reports projected synergies would reach $7 billion by 2002 (Holmstrom, & Kaplan, 2001).

Exxon justified its purchase of Mobil in part by claiming some $2.8 billion in projected savings. Yet studies of mergers have shown that such projections often turn out to be mirages. The hoped-for economies of scale that bigness brings may not be able to compensate for the hidden costs of running an expanded conglomerate. In the end, the only real rationale for a merger is heightened efficiency, productivity and profitability. All else is secondary.

Success of ExxonMobil merger:

Three major types of merger motivations were identified by Berkovitch and Narayanan (1993): synergy, hubris, and agency problems. In the Exxon-Mobil merger, synergy and efficiency objectives were promised and achieved. The initial synergies were estimated at $2.8 billion. As a result of rapid and effective integration of the two companies, Chairman Lee Raymond announced within seven months of the completion of the merger that synergies of $4.6 billion had been achieved. Analysts’ reports were projecting a further increase in synergies to the $7 billion level.

Synergies can result from cost reductions or revenue increases. ExxonMobil benefited from sales of duplicate facilities and employment reductions. Costs were reduced by adoptions of best practices from both companies, particularly in combining advanced technologies. Revenue increases can come from strengthening the market positions of each. In addition, joint ventures with major producing countries such as Saudi Arabia were facilitated by strengthening Exxon’s position as one of the three largest international oil companies (Holmstrom, & Kaplan, 2001).

Hubris may be reflected in overpaying for the target. Exxon paid a premium of $15.5 billion. The equity market cap of the combined firm increased from $234 billion to actual values of $280 billion by the end of 1999 and to $301 billion by the end of 2000. Thus the capitalized value of the synergies was $46 to $67 billion. In his news release of 8/1/00, Chairman Raymond stated that an improvement of at least 3 points above the historic Exxon level of return on capital employed (ROCE) was being achieved. These results are inconsistent with agency problems (Holmstrom, & Kaplan, 2001).

Other motives for mergers discussed in the literature include tax savings, monopoly, and redistribution. Tax aspects were not a major factor. Regulatory agencies found no antitrust problems in the upstream activities (exploration and development). However, divestitures were required in downstream activities (distribution and marketing) (Yergin, 1993).

Redistribution from bondholders did not occur. Redistribution from labor took place in the sense that employment reshuffling and reductions were made. In their review of merger activity, Holmstrom and Kaplan (2001) described the positive influence of a number of developments in the 1990s.

These included an increase in equity-based compensation, an increased emphasis on shareholder value, a rise of shareholder activism, improved and more active boards of directors, increased CEO turnover, and an increased role of capital markets. The efforts for efficiency improvements sought in the Exxon-Mobil merger reflected these general developments. In their companion review, Andrade, Mitchell, and Stafford (2001) further developed the earlier Mitchell and Mulherin (1996) emphasis on the role of shocks in causing mergers. Their analysis is applicable to the oil industry mergers. But the pressures have been more than periodic shocks.

Price instability has been a continuing problem for oil firms. Large price changes in both downward and upward directions have been destabilizing. Price drops reduce profit margins and investment returns. Price rises increase margins and returns, but stimulate production expansion and new entrants. Hence, price uncertainty created strong continuing pressures for improved efficiency to reduce oil finding and production costs.

Another oil industry characteristic is high sensitivity to changes in overall economic activity. The East Asian financial problems in 1997-98 reduced demand resulting in a decline in world oil prices to below $10 per barrel in late 1998. The decline in growth in the U.S. economy beginning in 2000 contributed to the drop in oil prices from $37 to under $20 per barrel during 2001 (Andrade, Mitchell, and Stafford, 2001).

The rise of 15 government-connected national oil companies created increased competitive pressures. The increased application of technological advances in exploration, production, refining methods, and transportation logistics created new competitive opportunities and threats. Price instabilities (like persistent overcapacity in the steel, auto, and chemical industries) cause continuing pressures for M&A activities to reduce costs and increase revenues. In addition, the $2 billion synergy in the BP acquisition of Amoco stimulated competitive responses resulting in other mergers, alliances, and joint ventures. The oil industry M&A activities during 1998-2001 are consistent with the industry shocks theory, an industry structural problems theory, and a theory of competitive responses (Andrade, Mitchell, and Stafford, 2001).

Mergers often fail because (1) companies experience difficulties when trying to integrate divergent corporate cultures, (2) companies overestimate the potential economic benefits from an acquisition, (3) acquisitions tend to be very expensive and (4) companies often do not adequately screen their acquisition targets. In the case of ExxonMobil, none of these factors proved to be a problem. These companies knew exactly how they would benefit from each other’s technologies and resources and did not go into the merger with high expectations but little fact. The merger was expensive and took a long time to gain approval from the authority due to its large size and cost but so far, the cost has been in large part justified. Divergent corporate cultures never seemed to be an issue and both companies spent a long time to size the environment, themselves and the other company before succumbing to the necessity of this merger (Andrade, Mitchell, and Stafford, 2001).

The Exxon-Mobil combination is an archetype of a successful merger. Fundamentally, the reasons, structures, and implementation of the transaction reflected the characteristics of the oil and gas industry. The industry increasingly utilizes advanced technology in exploration, production, refining, and in the logistics of its operations. It is international in scope. World demand is sensitive to economic conditions. The weakness in the Asian economies pushed prices below $10 per barrel at the end of 1998. The U.S. recession which began in March 2001 helped push oil prices from $32 a barrel to $17 a barrel by November 2001. Critics of merger activities have argued that the likelihood of successful mergers is small.

Prevailing market prices of the equity of firms embody some probability of a takeover. In addition, they argue that purchase prices include substantial premiums requiring increases in values of acquired firms not likely to be achieved. The Exxon-Mobil combination provides counter evidence. Synergies include improvements in the performance of all the parties in the transaction. Premiums are usually expressed as a percentage of the pre-merger market cap of the target. These percentages can run high.

However, more relevant is the amount of the premium in relation to the size of the combined firm. The $15.5 billion premium to Mobil was 26.4% of its market cap, but represented only 6.6% of the combined pre-merger market cap. The $2.8 billion pre-merger synergy estimate ($7 billion post-merger) required only a modest valuation multiple to recover the $15.5 billion premium (Andrade, Mitchell, and Stafford, 2001).

A strategic change can often open amazing new doors of opportunities for companies or signal the beginning of the end – the key is planning. Rational planning is extremely vital for the health of a strategic change and this is the reason why analytical tools such as the Porter five forces model are very helpful during the entire process which leads to the implementation of the change. The executives at ExxonMobil did a lot of things right when they planned the 1999 merger and so far, the results have mostly been favorable. In fact, benefits of the merger were greater than expected and earlier forecasted. Today, the company is progressing opportunities for profitable growth across all of its businesses, the most seen for many years, perhaps going back to at least the 1970’s. This strategic change should be considered a classic example of a change which was well planned and well executed. The merger has definitely increased the scope of operations for ExxonMobil making it truly a giant in today’s oil industry.

Works cited :

1. Adamson, Scott & Anthony Marks. Preparing to sell your business in today’s marketplace. Los Angeles Business Journal, (July 30, 2001). Nov 20, 2004. http://www.findarticles.com/p/articles/mi_m5072/is_31_23/ai_77338381
2. Andrade, Gregor, Mark Mitchell, and Erik Stafford. New Evidence and Perspectives on Mergers. Journal of Economic Perspectives (2001), 15, 2.
3. Berkovitch, Elazar and MP Narayanan. Motives for Takeovers: An Empirical Investigation. Journal of Financial & Quantitative Analysis, 28 (No. 3, September 1993), 347-362.