One of the crucial aspects of strategic management in relation to business growth pertains the occurrence of acquisitions and mergers. Companies engage in this strategy as a way of increasing their market coverage and consumer base. As a matter of fact, both international and local growth can be intensified through companies engaging in mergers or acquisitions. However, in spite of the benefits of mergers and acquisition, companies need to make deliberate consideration of their position in their industry of operation to ensure a positive change in their fortunes. Such tactical decisions require an in-depth backing through facts obtained in the preliminary analysis of the company’s standing and the desirability of effecting an acquisition or a merger.
Selected Companies
Macy’s Inc. - Operates Internationally
The chosen company that operates internationally is Macy’s Inc. From the company website, Macy’s Inc. is described as a large global holding with operations in department stores where it controls two departmental chains namely Macy’s and Bloomingdale’s. The company stores predominantly deal with the sale of outfit, shoes, beauty products, jewelry, accessories, furniture and housewares. Throughout the United States, Macy’s Inc. operates stores in more than 40 states, and covers the District of Columbia, in Puerto Rico, Guam and Dubai (Macy’s Inc., 2017). In addition, Macy’s Inc. uses online channels to sell its products, hence enabling it to reach out to all consumers all over the world. The company has been aggressive in its operations which earned it the ranking as one of the top 20 retailers by profits in the United States.
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Notably, Macy’s stores provide a wide range of products that depict a close relationship with popular culture. On the other hand, Bloomingdale’s stores portray some degree of focus following its up-scaling with the intention of targeting for more wealthy consumers. Looking at the company’s history, it becomes clear that the journey has been long but successful. Remarkably, Macy’s Inc. company launched their initial store in 1858. During this beginning phase, they mostly stocked dry goods which the consumers easily accessed in the store (Macy’s Inc., 2017). With successful operations, the store expanded operations and commenced the production of clothing made as per the clients’ measurements. As the years went by, the company saw the need for expansion and chose to use mergers and acquisitions. Although the mergers took place severally, the most noteworthy involved merging with Federated Department Stores, which took place in 1994. A notable acquisition involved their acquisition of the May Departmental Stores in 2005 (Macy’s Inc., 2017). From an industry perspective, Macy’s Inc. stocks seem to consistently perform at a slightly improved level as compared to other stores in the department stores industry (Yahoo Finance, 2018).
Kohl’s Corporation - Operates Solely within the U.S. Without A History of Mergers and Acquisitions
Kohl’s Corporation competes in the same industry as Macy’s Inc. Its operations fall under the department stores industry where it controls a chain of retail outlets widely known as Kohl’s. In these stores, the company mainly sells electronics, jewelry, beauty products, clothing, beddings, furniture, footwear, and housewares. The company’s operations are solely in the United States where its stores run in over 45 states (Kohl’s, 2017). In the company history, the first store by Kohl’s was built and opened in 1946 (Kohl’s, 2017). At the time, the strategic standing of the store was amongst discount stores and upmarket department stores. Over the years, the company experienced massive growth, mainly owing to the progressive launching of new retail stores. Although the company engaged in one key acquisition in 1986 where it acquired BATUS Inc. stores, it took place before the firm became a public corporation in 1992 (Kohl’s, 2017). In an overall perspective, Kohl’s stocks show a trend indicating good performance and remain at par with the general industry trend, though with slight growth.
Strategy Analysis Prior to Acquisition - Macy’s Inc.
As indicated in their website, the acquisition that resulted in the most remarkable effect on the recent growth of Macy’s Inc. involved the year 2005 acquisition of May Department Stores. Prior to the acquisition, the company went through a period of brand strengthening and diversification. Following a massive brand reinforcement campaign, diversification took course where the initial opening of two stores under the Bloomingdale’s chain took place in Atlanta. The stores targeted more wealthy and affluent customers. Likewise, Macy’s unified the stores running in various states and re-branded them. As part of this rebranding campaign, the plaques for various regional Macy’s stores went through significant changes to contain and take account of the Macy’s brand name. In 2004, Macy’s created a Home Store division which further increased their market coverage (Macy’s Inc., 2017). Additionally, the firm made various program launches such as the program of consumer loyalty that took place in 2005 and presented fresh credit cards for its clients (Macy’s Inc., 2017).
The various actions carried out by Macy’s Inc. during the pre-acquisition period demonstrate the various factors considered in maintaining competitiveness. The company successfully managed to make different arrangements in its organizational structure as a way of improving efficiency. Progressively, it enhanced the brand name through including the name Macy’s across all its stores names, made provisions for a division for diversification of the existing brand. Through Macy’s Home Store, the company formed a new brand and a chain of stores targeting wealthy consumers. Such strategic actions point out that Macy’s Inc. engaged in active spreading out both in a horizontal course through launching new stores. Similarly, it engaged in active expansion from a vertical dimension through enhancing their organizational arrangement, cutting down overheads, product diversification and reinforcing the two brands under Macy’s Inc.
During the acquisition of May Department stores, Macy’s Inc. considered the attractive side of the business. At the time, May Department Stores Company operated around 500 department stores and over 700 stores of formal as well as bridal apparel across the United States and outside the country. The stores operated in a similar variety of items as Macy’s hence acquiring it would insignificantly affect operations. As such, the acquisition had a strategic bearing for Macy’s Inc., as the company enhanced its organization and branding. Furthermore, it provided the needed impetus for Macy’s to grow its network within the United States and overseas. Similarly, acquiring the May Department Stores proved a very wise decision since it enabled Macy’s Inc. to obtain market leadership in the department stores industry and made its stores accessible throughout the United States. Ultimately, the acquisition facilitated Macy’s Inc. in growing from a middle-scale competitor to one of the top brands in the department store industry.
Profitable Candidate to Acquire- Kohl’s
Kohl’s Company runs a large chain of department stores and has numerous loyal clients. The corporation emphasizes on retailing products from great brands and provides purchasing convenience, value and outstanding customer service (Kohl’s, 2017). Nevertheless, the proceeds from Kohl’s operations seem to have a downward trend, dropping by 10% in 2013 and a 15% decline in profits in 2014. The deterioration in sales seems to occur as a result of the shifts in the competitive environment. Nowadays, customers opt for online shopping where numerous online retailers occupy the niche presenting consumers with a wide variety of products. Although Kohl’s has demonstrated dedication to creating a robust ecommerce solution, it may prove challenging to make up for the deterioration in sales by depending exclusively on an e-commerce approach.
Given the changes in Kohl’s fortunes, it becomes increasingly necessary for the company to consider making an acquisition. As such, a profitable venture for Kohl’s is to make an acquisition of its rival firm, J.C. Penney Company Inc. Notably, this company also competes in the department stores industry and engages in the sale of various brands of clothing. JCP Inc. gained significant success in the 2008 to 2009 period, as it incorporated online sales alongside catalog sales. All the same, a succession of ineffective strategic moves such as its resolve to make alterations in its pricing approach, the clash with Google concerning search results and delayed exit from catalog approaches among others considerably hurt the company’s market position (Yahoo Finance, 2018). Following the unfortunate turn of events, JCP’s stock values have experienced a somewhat lower value as compared to the industry’s standings. However, the JCP Inc. still possesses a huge chain of stores and it could prove a very profitable acquisition for Kohl’s. Besides, JCP currently has a functioning solution for ecommerce that Kohl’s can take advantage of. Therefore, it may be extremely profitable for Kohl’s to make an acquisition of JCP. Such an acquisition will serve a dual purpose in helping Kohl’s increase its network of stores throughout the United States and avail more openings for venturing in product sale in overseas countries.
International Business-Level and Corporate-Level Strategies - Macy’s Inc.
Basically, a business-level strategy refers to the set of organized and incorporated actions and commitments which a company employs to gain a competitive edge by deploying its major capabilities in particular markets. While competing in large markets, crucial forms of business-level strategies include differentiation and cost leadership. On the other hand, while operating in narrow markets, strategic focus lay in price leadership and differentiation. Companies may also use a mixed strategy, typically recognized as integrated cost leadership / differentiation. Strategy takes a significant position since applies generally in all business operations. It supports corporations in keeping pace with shifting business environments and offers a better comprehension of external environment.
In the case of Macy’s Inc. one of their strategies is collaboration with diverse brands to gain a greater command of the market. The company also makes valuable offers to its consumers in the US and globally. Macy’s Inc. targets an extensive range of consumers and as a result, its business-level strategies align either with differentiation or cost leadership. At first, Macy’s Inc. inclined towards relying on differentiation and enlarged customer attention due to the wide variety of products offered in the stores. Nevertheless, since 2010, the company introduced cost optimization and cost cutting strategies. In turn, it facilitated the company in remaining profitable in spite of the business environment with severe competition with some retailers using online platforms to sell their products (Macy’s Inc., 2017). Thus, at present Macy’s Inc. employs an integrated cost leadership / differentiation business-level strategy for its operations at the global level.
On the other hand, corporate-level strategies describe a business’s overall course towards growth through managing commercial and merchandise lines. They involve measures to ensure growth of the company’s influence in the industry and markets in which it operates. In the case of Macy’s Inc. corporate level strategy underlines the set of actions the company engages to gain a competitive edge through choosing and managing a number of businesses associated with diverse product markets or industries. Considering the extent of business relatedness and the degree of similarity in an operational dimension, a firm can select either related or unrelated diversification.
A careful analysis of Macy’s Inc. reveals that its brands depict remarkable relatedness in the variety of products offered although varying in quality and price of the products. Likewise, the activities required for retailing diverse brands throughout the U.S. and online depict outstanding similarities. As such, it is clear that the degree of relatedness in both corporate and operational dimensions are high. Therefore, Macy’s Inc. is capable of using a corporate-level strategy that makes use of the advantages of the two types of relatedness. Owing to the occurrence of corporate relatedness, the company can utilize its key competencies such as distinctive brand assortments and exceptional customer service to the global level. Furthermore, taking advantage of the operational relatedness, Macy’s Inc. stands in a position to use economies of scope towards optimizing its costs.
Potential strategic enhancements for Macy’s Inc. consist of increasingly taking advantage of their economies of scale, forming contracts with international shipping companies as a way of boosting online transactions, providing a virtual fitting-room and adding more mobile services to draw more customers. Ultimately, Macy’s needs to use non-traditional approaches of drawing online clients as it will enable the company to maintain competitiveness.
Possible International Business-Level and Corporate-Level Strategies - Kohl’s
As earlier indicated, the acquisition of JCP remains one of the top-most recommendations for Kohl’s as it would create openings for successful penetration of the international market. Currently, Kohl’s serves a wide variety of consumers and has a strong position as a department store chain providing unique labels and brands presented at moderate prices. As a result, it is paramount for Kohl’s Company to select an integrated cost leadership/ differentiation strategy towards gaining worldwide expansion. The company stands to gain more through online selling of its products and maintaining rare brands and private brands. Moreover, Kohl’s can distinctively stand out in the midst of other online retailers since it offers excellent customer service and a suitable interface for buying their products.
As regards corporate-level strategy, Kohl’s Corporation needs to make use of the real-time operational relatedness and corporate relatedness strategy. Without a doubt, Kohl’s company ought to apply economies of scale as a way of cutting down costs and offering prices that competitively benefit the company. At the same time, the company requires to provide a unique collection of merchandises to achieve greater customer attention. While expanding globally, the best strategy for Kohl’s is to begin by exploring the market in Canada. After attaining their targets in online sales, the company may commence offering its products in other parts such as South America, Australia, and Europe. The suggested acquisition of the JCP Company will improve both operational and corporate relatedness, ultimately helping towards improving the market and industrial standing of the Kohl’s Corporation.
Corporate Social Responsibility-Kohl’s
Kohl’s company has continually displayed commitment to upholding the greatest standards of ethical conduct and social responsibility. Kohl’s suppliers have the instructions to ensure a safe working environment, provide workers dignified and respectful treatment, act impartially and ethically, and apply environmentally friendly processes the marketing of products or execution of services for Kohl’s. The Kohl’s Company obliges its suppliers to function in accord with the codes contained in the Apple Supplier Code of Conduct and totally comply with all pertinent laws and regulations. The Apple Supplier Code extends beyond simple compliance with the regulations by including globally accepted standards towards advancing social and environmental responsibility. Through the Code, Kohl’s outlines its expectations for Supplier conduct concerning health and safety, labor and human rights, ethics, environmental protection, and management practices.
References
Kohl’s Inc. (2017). Company Filings . EDGAR Database. Retrieved May 3, 2018 http://www.sec.gov/edgar.shtml
Macy’s Inc. (2017). Company Filings . EDGAR Database. Retrieved May 3, 2018 http://www.sec.gov/edgar.shtml
Yahoo Finance. (2018). Company Stocks. Retrieved May 3, 2018 https://finance.yahoo.com/quote/
