Risk Associated in the business in the business diversification activity 1. Creation of a new or common corporate culture between Exxon and Mobil 2. Retention of key employees with the right knowledge and expertise 3. Meeting regulatory and anti-trust requirements to prevent dissolution and maintain competitiveness

Merger Risks

Unfortunately, any merger between two established companies creates challenges that must be overcome in order to achieve the projected benefits. These include creating a new/common culture as opposed to the distinct cultures of the independent companies, meeting regulatory and antitrust requirements to assure the continued functioning of a competitive marketplace, and retention of key personnel to reap the benefits of their knowledge and expertise.

The companies have significantly different corporate cultures. Exxon is a conservative company with a strong ethic of following the rules handed down from above, while Mobil is more liberal and expects individuals to think for themselves and develop their own solutions to the problems that arise.

On the regulatory front, as the top two U.S. oil companies, there are many markets throughout the United States where Exxon and Mobil dominate the sale of gasoline, either through directly-owned filling stations or through franchisees. It is highly probable that regulators will require divestiture of some filling stations and release of some franchisees from their contracts in order to maintain competitive markets.

The other key risk element is retention of key staff to ensure that Mobil’s strengths are continued in Exxon Mobil. Most notable, from a strategic perspective, will be retention of Mobil executives with the knowledge of Mobil’s markets and the market strategies that have enabled it to remain competitive. Mobil has exploited some market niches that Exxon has either not sold in successfully or has not attempted to participate in. Without these executives, Exxon Mobil will lose its hold on these markets as competitors seize on its weaknesses. Additionally, Exxon is purchasing Mobil’s technology and research to bolster its lagging R&D program. Without the continuation of Mobil’s leading engineers, Exxon will continue to lag the industry in this critical area.