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Merger, Acquisition, and International Strategies

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Merger, Acquisition, and International Strategies

Category: Research Paper

Subcategory: Business

Level: College

Pages: 6

Words: 1650

Merger, Acquisition, and International Strategies
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Merger, Acquisition, and International Strategies
AbstractMergers and acquisition are companies that either come together to form one company with either having equal rights in the new venture or a company could buy off another one and become the sole proprietor. An example of such a company is ExxonMobil. It is an oil and gas corporation that was formed in the year 1999, after Exxon and Mobil joined to form ExxonMobil. The company has been ranked as one of the big companies globally in terms of the revenue collected which is a huge success for the organization.
Merger, Acquisition, and International Strategies
In 1911, the standard oil trust was dissolved after a court order leading in the formation of Jersey standard and Soccony which are known as Exxon and Mobil. During the 1990s, Exxon decided to focus mainly towards the Asia-Pacific region and in anticipation of a sudden expansion in the market for Liquefied Natural Gas (LNG) it chose to heavily invest in it through aggressive refinery expansion and exploration of new oil projects.
Exxon also had a wide experience in deep water exploration especially in areas around West Africa. Mobil had exploration and production interests majorly in Equatorial Guinea and Nigeria.The merged companies had geographic and functional diversity and this was expected to improve the new corporation’s financial and business performance. This could be achieved through reducing the sensitivity of the organisation’s earning to the market conditions that are highly volatile, a common occurrence in the energy industry.
The merger helped to diversify their portfolio of assets that is production of petrochemicals, petroleum refining and marketing, production of natural gas and crude oil. In a mature market the competitive position of ExxonMobil would be enhanced from a geographical view and it would also place the corporation in a perfect position to explore new opportunities for growth in an emerging market (Totalbeauty.com, 2015
Other reasons that were thought to drive the huge merger formation were advantages of new and improved technology, there was long term capital production, and the fall in oil prices played a strong part enhancing the corporation’s earning stability. Despite the fact that ExxonMobil faced a lot of challenges during the merger, it was able to overcome them and its financial performance improved steadily since the fiscal 1999 (IUltra.com, 2015).
The decision to merge the two companies was a risky affair but a wise one. It helped to bring together a lot of portfolio assets from the two former companies which has paid off well with enough competitive advantage against other local and international companies. The decision also improved the financial revenue of the company as a whole so the decision was a prudent one. International business level strategy
ExxonMobil has various strategies for reaching the global markets since it is a diverse corporation, it is able to adopt many different avenues in order to attain this. The main skeleton of ExxonMobil’s infrastructure is its export industry. It exports many different products such as petroleum, natural gas, oil and kerosene which are all valuable commodities in the energy industry. The company mainly obtains direct investments as a means of penetrating the global market (Exonn Mobil Chemical, 2015)
The core elements of ExxonMobil business strategy includes continuous focus on delivery of quality goods while increasing efficiency in production of those goods. Being the premier product developer and enhancing the quality of existing products in a bid to strengthen the current business position. Another important business strategy is to invest with discipline and intelligence which means identifying trends that are long-term contributing in shaping the industry as a whole. These strategies have helped the organization to penetrate into the global market without any fear of losing their current position in the industry. These strategies have proven to be prudent given the big size of the company and the fact that it is still exploring new market ventures.
International corporate level strategy
One of the strategies used is growth. The corporation has increased the total number of markets that are supplied by their products. This has been achieved through exploration of new market opportunities and expansion of the current business. This strategy has significantly contributed to the overall revenue earned by the company as well as it has enabled the company to acquire more employees as result of its expansion. Growth has also been experienced through diversification of the asset portfolio.
The other important strategy in use is stability. The company has continued to produce some products over a number of years such as petroleum oil and natural gas. By producing the same products, the company has been able to serve the same customers by attaining their loyalty and thus it is able to sustain the ongoing business operations. This strategy enables the organization not to lag behind even though it does not help the company to grow much bigger.
Renewal strategy is another corporate level strategy. It helps the managers to steer the organization away from trouble in case of unforeseen losses. The managers are able to apply a turnaround strategy which enables the organization to avoid incurring unnecessary losses by making other decisions and policies that will help avert the situation at hand.
ULTA Beauty
This is a public company founded in 1990 by Richard E George and has its headquarters at Bolingbrook, Illinois.it was traded publicly on NASDAQ on October 2007 and is made up of a chain of separate stores that deal with a variety of fragrances, cosmetics, hair care, and skinproducts for both gender. Each one of the stores has an in-built salon offering services ranging from skin treatments to hair coloring and haircuts to manicures all by highly qualified and certified professionals. In addition to offering both high end and drug store cosmetics they have their own store brands such as makeup, nail polish and fragrances.
Business level strategy
These strategies usually specify the actions that are taken to provide expected value to clients and are often representative of methods employed by a company to conduct the different functions and operations. ULTA beauty should consider incorporating a business level strategy that will not just maximize their revenue but will also give the consumer worthy services.
Identifying market opportunities
This strategy involves carrying out an economic analysis and finding out a consumer demand or need that is not met or that is inadequate. Altering already existing products or services and also targeting a specific group of people in an area are additional ways of identifying the market opportunities. By doing this a company provides new and improved product and services and thus maximizing returns from the consumers. Specific market opportunities may let a company charge higher prices and this is because the substitute products may be absent in the marketplace.
Corporate level strategy
Diversification
This represents the overall outlook and direction of the corporation and helps achieve set goals and targets. For some companies this is the only type of strategy they require. ULTA beauty should incorporate the diversification component of the corporate level strategy which seeks to maximize profits by increasing sales through new markets and new products. Acquiring new consumers and strengthening the existing client loyalty will greatly influence the company’s expansion and success. Performing an economic and clientele analysis is imperative in order to come up with new products that are acceptable for a certain market. This company should diversify their goods and services by having new additional items and venturing into new products that the company has not dealt with. Examples of new products in this case would be the sale of lingerie and women’s underwear and this would go a long way in increasing sales. This is mainly because clientele mostly women would also get to shop for these commodities after getting other services provided in these superstores.
Mergers and acquisitions are a huge part of the business and corporate world. More often than not separate companies come together to form even bigger ones. A merger basically is the combination of two companies that are of a similar size to form one new company. On the other hand an acquisition takes place when one company buys another company and it becomes the new owner. Mergers and acquisitions are important in that the sole purpose of merging or acquiring company is to create synergy. Synergy means that the value of the newly established partnerships is more when compared to the two separate entities. Through this there’s generation of additional revenue which is key in pursuing new ideas and consequently bringing modified and better products to the market.
ULTA Beauty Company could merge with a company providing the same services and this is referred to as horizontal merging. Such a company would be Total beauty experience in California which is a full service salon and retail store. Both of these companies offer the same line of products and services and thus have an advantage of familiarity and added expertise. Merging will increase the market and the diversity of products from the two companies and in turn this will increase revenue collected. Merging the two companies makes it cheaper for the two in that they get to combine their output as opposed to creating them separately. In the case of acquiring deals from banks, the combined bigger company would easily be considered as the banks prefer doing business with bigger firms. Advertising and marketing costs would reduce too because of the combined resources and platforms that the two companies bring to the table.
Conclusion
Companies may function either solely or in combination with other companies which is through merging or acquisitions. Firms interested in forming partnerships should acquire relevant information regarding the companies they are interested in by conducting proper analysis and anticipating the expected consequences of their business decisions. As in any business decisions there are successes or failures in merging. If the benefits outweigh the risks it is prudent that an organization makes the decision to merge or acquire another company and an example of a successful merger is Exxon Mobil as exemplified above.

References
Exxonmobilchemical.com, (2015). Our strategy. Retrieved 22 May 2015, from http://www.exxonmobilchemical.com/Chem-English/about/our-strategy.aspx
Ir.ulta.com., (2015). Ulta.com- Investor Relations – Company Overview. Retrieved 22 May 2015, from http://ir.ulta.com/phoenix.zhtml?c=213869&p=irol-homeprofile
Totalbeautyexp.com. (2015). Beauty Supply Products & More: An Ultimate Shopping Experience. Retrieved 22 May 2015, from http://www.totalbeautyexp.com/

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