G.E., EXXON AND FORD MERGE TO CREATE AUTOS POWERED BY COSMIC ELECTRICITY RATHER THAN FOSSIL FUELS NEW PROCESS IS CALLED “LI-FI” G Fex

Current Company Situation Exxon is an oil exploration and refining company Exxon earns $397.58B per year  One of the most profitable companies in the world Ford is an automobile manufacturer Ford’s revenues are $146.30B per year  The only auto company that did not participate in the bailout G.E. is an energy and infrastructure provider G.E. earns $144.91B per year  Has had a few difficult years  Stock worth half of what it was in 2000

New Strategy In order to expand the business and diversify its holdings, Exxon plans to merge with Ford and G.E. to create G.Fex Uses Cosmic Energy, stored in satellites and delivered through light ray to power automobiles Ford will manufacture the new automobiles that run on Li-Fi G.E. will deliver the electricity through Li-Fi Exxon will fund the project so it is not so dependent on oil sales Why should Exxon need a new strategy? Oil reserves are limited People want an alternative fuel, and LiFi is both economical and unlimited Turmoil in the Middle East, oil prices have plummeted

Rationale – Why It Would Work Everyone wants a cheap, renewable energy source G.Fex would take light energy from the Sun and transmit it through light rays to the Earth, cleanly  Not like solar power, where you have to capture the power in a cell once it reaches Earth, and requires receptor panels What you could use it for  You could power your electric car constantly  No need for a plug, even when it’s cloudy  No need for gasoline or oil  Can eventually power homes and factories  Ensures that G.Fex continues to profit even if oil demand drops

Timeline G.Fex Launches Satellites and Moon/Mars energy stations Testing on prototype auto models Year 1-3 G.Fex tests light capture and transmission Auto Plants are refitted for production Year 4-5 G.Fex rolls out delivery systems to businesses and consumers Autos produced and sold Year 6-8

Strengths Weaknesses Positions G.Fex for first to market adoption for LiFi Repositions G.Fex as a green energy leader rather than a polluter Expensive Long payback period Unproven Requires extensive changes SWOT Analysis Opportunities Threats Third World countries are pursuing new energy methods due to poor infrastructure The world is running out of oil Sun spots/eruptions may make this energy system unreliable Solar competitors may offer a similar product

Ethical Unethical G.Fex can help stave off pollution and disease by creating green energy that is renewable G.Fex can help Third World countries modernize cheaply G.Fex can make transportation cheap for everyone G.Fex can put competitors out of business by using the loss leader method G.Fex could control Third World countries through their energy dependency G.Fex will make other companies go out of business, losing jobs Ethical Considerations

Revenues – Expenses = Profit Show how you will increase profit (then delete these instructions) Revenues – Expenses = Profit Show how you will increase profit (then delete these instructions) Take the companies and combine their Revenues : Exxon $ B Ford $ B GE$ B Total$688.79B Add Savings $ B New Revenue$ B Here, you can save some money by combining departments: Expenses : Exxon $ B Ford $ B GE$ B Total$ B Rev – Exp = $ B Savings: 25% $33.228B Income Statements

Stock Performance

Tips for Presenting Financial Information (You will delete this slide for your presentation) Compare time periods:  Identify a trend  Exxon’s revenues have dropped over the last three years  They need a new strategy – since they are energy leaders, it may as well be in the energy field  Compare individual line items  The decrease is explained by the escalating cost of drilling for oil Use percentages to make comparisons  Revenue dropped 30% year over year  With the new strategy, 25% of expenses will be saved through redundancy of personnel (for all the combined companies) Write out a list of possible questions before you present

Effect of Merger on Stock The stock price of GFex will be stable because the underlying companies are all Blue Chips  The dividend will continue to be paid and will be the highest dividend in the market: $4.18 combined People will continue to buy the stock for the dividend, pushing up the price Downside: if other players in the industry are able to create this energy product more cheaply, GFex becomes a behemoth that has too many layers of employees/management and high labor costs