... been speculation of a possible merger between the two companies. Problem Statement "In light of the current industry environment, can Texaco and Shell remain competitive in an alliance environment or will a merger be necessary in order to survive?" Competitive Analysis A.) Environment/Industry a.) Barriers to entry include: i. Exxon, Chevron, Mobil, Shell, and Texaco account for 60% of U.S. lubricant base oil production ii. Strong oligopolistic industrial structure iii. Economies of scale iv. Complex technologies v. Extensive distribution networks vi. Elaborate sales and marketing activities b.) Competition is direct and highly specialized c.) Steady decline in oil prices d.) Strict laws and regulations in the lubricant industry B.) Firm a.) Texaco is ranked as one of the top 5 oil companies in the world b.) Texaco controls 7.1% of the total U.S. gasoline and automotive lubricant sales c.) Texaco controls 6.6% of the total U.S. refining capacity d.) Texaco has experience and history with maintaining long-term alliances: Formed Caltex with Chevron in 1936 e.) Equilon Enterprises has an ...

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