Lufkin Industries

Lufkin Industries is operating in an oligopoly market including some of its direct competitors according to yahoo finance such as CE Franklin Ltd. (CFK), Weatherford International Ltd. (WFT), PVT1 (MAN SE), and Oil & Gas Equipment & Services (Industry). These few large companies operating in an oligopolistic market affect each other when they decide to change their price and output. In the Oil Field Division of Lufkin Industries, producing their output like the Air Balanced Pumping units are very expensive that any change in price or output should be well planned and researched to avoid increase cost especially labor cost.

November 1, 2010, Lufkin Industries announced that it has acquired the operating assets of Petro Hydraulic Lift Systems, LLC (PHL). (PRNewswire, 2010). A company that specializes in the design, manufacture and leasing of hydraulic rod pumping units for oil and gas wells. According to the president and chief executive officer John F. “Jay” Click, their acquisition of PHL is a solid strategic fit to their industry. With this big decision acquiring PHL, it is an expansion in the part of Lufkin and this might scare potential entrant to this kind of industry. It will also give a Lufkin an opportunity of having the first-mover advantage in every decisions made in the market that will increase the payoff or profits.

They paid $0.125 per share on its common stock last December 10, 2010. With this dividend, they will attract more investors to increase their capital. They have a strong customer base such as ExxonMobil, Chevron, Shell, Petro, Goodyear and other big corporations that is contributing to their goodwill and attracting more consumers with their good quality products.

Lufkin Industries is one of if not the leader in its industry. It has recently acquired Petro Hydraulic Lift Systems giving it a stronger grasp on the industry. This strategic expansion made Lufkin very intimidating to any future potential entries in to this industry....