Skip to main content

To Acquire or Build Organically, THAT is the Question facing big box retailers today

This will be a Harvard Business Case study in probably the not-so-distant future, given the accelerated speed of business in the i-era. The link to this Wall Street Journal article (https://www.wsj.com/articles/targets-new-online-strategy-less-is-more-1494846001) talks about how Target has had the opportunity to and even explored acquiring other companies to help it accelerate its growth while also keeping up with Walmart as well as just trying to keep the taillights of Amazon in its sights. And yet, unlike Walmart which has gone on a veritable buying binge snapping up eCommerce companies from Moosejaw to ModCloth and made a huge splash in buying Marc Lore's (formerly of Quidsi/diapers.com) Jet.com Target has eschewed buying capabilities and instead focused on its bread & butter, it's stores (http://www.chainstoreage.com/article/target-debuts-0-shopping?tp=i-H55-Q5S-3M4-5Mz5m-1u-14Qs-1c-qsz-5MtPN-tb7Hx&utm_campaign=Daily&utm_source=Experian&utm_medium=email&cid=12900&mid=79359738). It is interesting to note that in the history of tech acquisitions most have been noted as failures. Does Walmart's acquisitions fall into tech acquisitions? Maybe, maybe not. Most tech mergers/acquisitions involve hardware (think HP and Compaq or Alcatel and Lucent or Google and Motorola) or strategy (Aol and TimeWarner, News Corp. and Myspace). It's not a stretch to say it does. But what is Walmart really getting? Customers? Sure. Potentially new tech that can be lifted and shifted to leap-frog the main business from where it is to get ahead of the likes of Walmart? Yep. But one area that is often overlooked in mergers and acquisitions and yet always seems to figure prominently in 20/20 hindsight is how those purchases align with the goal, mission statement or North Star of the acquiring company. Yes, Walmart is said to be keeping these acquisitions siloed and not integrated to help ensure that what made it successful doesn't become tainted or spoiled by corporate infringement. But by doing so does then Walmart derive the benefits it's looking to achieve? By not integrating how do people in Bentonville learn what Moosejaw is doing on the ground? And how do folks from Bentonville go out to learn from the team at Jet.com without them feeling like big brother is coming into to town? Sure there may be processes built or "ways of working" with the goal of enabling that sharing but practically speaking how much of that is going to take place on a daily basis? Does that sharing help accomplish Walmart's ultimate goal not just in making these acquisitions but overall? Having that North Star is critical to the success of a company. And there is a famous case study from not too long ago that provides us with a nice mirror lens to comparing the two strategies of Target and Walmart in GE and Westinghouse. Granted these were industrial behemoths but the lesson is applicable. As you can see in the attached link (http://www.jimcollins.com/article_topics/articles/BHAG.html) Jim Collins outlines beautifully the importance of a company having a North Star. All business decisions whether to acquire a company to the type of marketing to the product offering should pass through the North Star filter. If Walmart has a clear, understandable and easy to remember vision statement then it will avoid the fate of Westinghouse. If not? Well, tune back in about 4 months for the HBS Case study not only on how Amazon and Target left it in the dust but also the failure of not paying attention to History (i.e.: those who don’t pay attention to History are doomed to repeat it).

Comments

Post a Comment

Popular posts from this blog

Billionaire Carlos Slim to Launch TV Channel Exclusively Targeting Mexican Americans

Not one to doubt the business instincts of someone like a Carlos Slim. Still a curious move to launch a network targeting the Mexican American audience. While all census projections show the US Hispanic population continuing to grow almost all also reflect a change in the sub-demographic showing that the percent of US Hispanics that speak Spanish is in decline due to a variety of reasons (e.g: acculturation, slowing number of immigration). That being said the network could potentially follow the route of having more cultural nuances or lead points that would be relevant for US Hispanic audiences while blending the languages between English and Spanish to make it more relevant especially for Millennials. https://www.portada-online.com/2017/01/20/billionaire-carlos-slim-to-launch-tv-channel-exclusively-targeting-mexican-americans/
Post a Comment
Read more

Snapchat Looks to Acquisitions for Growth

To say that Snapchat's growth prospects have looked somewhat darkened would probably be an understatement. The one-time unicorn of tech just wrapped up its second-ever earnings on Thursday missing analysts’ expectations and reporting slower than expected daily active user growth = no good. Add on top of this that Facebook's Instagram is constantly copying Snapchat's innovation and the picture gets dimmer. BUT, is there still light at the end for this fading star? Perhaps. With a few recent acquisitions Snapchat may be pivoting/repositioning itself in much the same way Foursquare did to move from being a check-in app to a location data-collection manager with a social element. Which means not only will advertisers know where their key consumer is but also how they may be interacting with their brand and if not how to seamlessly introduce their brand in the path-to-purchase. The first of these acquisitions that points Snapchat in this general direction was Zenly, a French ...
Post a Comment
Read more

Is Eddie Lampert doing an Amazon to Amazon?

Back in the day Amazon used to sell books but it also had a strategic approach to broaden it's portfolio. That was to establish a seemingly non-hostile relationship with brick & mortar retailers like Toys 'R Us (see bankruptcy), Borders Books..etc. The goal? To get in front of the customer interaction. Amazon sold itself as an expert in the digital space and allowed for cost efficiencies (i.e: not having to build out a web-site or deal with the head-ache of how to fulfill product or the logistics on from where) from the brick and mortar company to focus on what it did best (selling in a physical store) while letting Amazon manage it's digital footprint which was a low volume mix relative to the traffic that was walking into the brick & mortar stores on a daily basis. But, as we all know now, by insinuating itself in the path to purchase and putting its brand in-between the customer and the brick & mortar brand Amazon was able to create a wedge that has grown...
Post a Comment
Read more