Exxon and Mobil were 2 separate American oil companies that merged to form ExxonMobil in 1998. It resulted in the creation of the largest oil company in the world. This allowed it to reduce its costs. The first thing the new firm did was reduce its workforce by 7% (9000 workers) this is an example of avoiding duplication as these workers were doing similar things when the 2 firms were separate and hence weren’t needed in the unified firm. This allowed ExxonMobil to reduce its costs.

It led to a reduction in competition in the oil industry which potentially could have meant that prices weren’t as low for consumers as they could have been if the firms were competing.

The firm stated the reason for the merger was to be a more ‘global competitor’ in spite of falling oil prices at the time. The merger is an example of a horizontal merger as both firms were in the same stages of production.  The merger eventually resulted in cost cutting and savings of $3.8 billion.