Strategic Fit
Acquisition of Homever & Diversification Plus 365 (300)
1. Synergy of portfolio
Synergistic gains are generated when there are a bundle of actors that can provide a higher level of value together than otherwise could have been achievable comparing the companies operating on their own (Eun and Resnick, 2007). As Homeplus expanding its business through acquiring its competitor (Homever) and convenience stores (C-Space), there were synergistic gains for Homeplus. The synergistic gains imply advantages such as shared production and product development, and expansion of market presence. Since the acquired firms (Homever and C-Space) share their product categories with Homeplus, there is a gain of larger economies of scale that can lower the production cost for Homeplus. Thus, it can be seen that the integration strategy of Homeplus generates a clear synergy.
2. Sustainability
According to resource based view theory (Barney, 1991; Winter, 1991), bundle of resources should have sustainable competitive advantage to be more effective. The acquisition strategy of Homeplus can be seen as a durable strategy since the ownership of acquired firms
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The most remarkable aspect of the ‘Value Store’ is that it is constantly developed and upgraded. For example, there are several generations of value stores, and each store has its own unique theme. The theme of first generation store was ‘value’, focusing on providing comfort and convenience. The theme of second generation store was ‘Artience’ which is a compound word formed from ‘Art’ and ‘Science’. The third generation store’s theme was emotion and culture. By establishing value stores, Homeplus can occupy an exclusive position in the market, and also gain positive reputation. This could be synergistic gains, since the value stores will share its high reputation with other normal stores of
Professor Choi, in 2001 (on behalf of Rolls Royce), modeled the potential for conglomerate effects arising from the merged entity bundling goods, which could lead to a reduction in competition. He states that consumers must buy one engine along with one set of avionics, making the goods complementary, and assumed that the same price is charged to all consumers. Choi considers a market where there are only two engine suppliers (GE and Rolls Royce) and two avionics suppliers (Honeywell and ...
With increasing transportation costs and tighter margins there is a possibility that some large specialty retail players will consolidate assets, knowledge and outsourcing capabilities in order to generate economies of scale and scope.
Home Depot is the brainchild of Bernard Marcus and Arthur Blank and came about after both men lost their job in the home improvement industry in 1978 (Parnell, 2014). Home Depot has acquired several smaller home improvement stores in both the U.S. and abroad through the years which enabled it to position itself as the world’s largest home improvement chain (Parnell, 2014). Home Depot focuses on the do-it-yourself segment of the market and sells sells tools, construction products and services. Marketing is a strong point for the company. They are able to maintain a competitive advantage by keeping themselves available to their customers at all times. Home Depot has been using both online and offline marketing efforts. The internet has become a very useful tool for the company and part of the reason that they are leading the market in DIY stores. Home Depot currently provides DIY videos on YouTube and Vine that cover current topics that consumers are likely to be interested in. They also have social media pages on Facebook and Twitter, where they have a huge following. They provide online communities where actual employees answer consumer’s questions and provide assistance on
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Selecting a business strategy that details valuable resources and distinctive competencies, strategizing all resources and capabilities and ensuring they are all employed and exploited, and building and regenerating valuable resources and distinctive competencies is key. The analysis of resources, capabilities and core competencies describes the external environment which is subject to change quickly. Based off this information a firm has to be prepared and know its internal resources and capabilities and offer a more secure strategy. Furthermore, resources and capabilities are the primary source of profitability. Resources entail intangible, tangible, and human resources. Capabilities describe environment and strategic environment. Core competencies include knowledge and technical capability. In this section we will attempt to describe in detail the three segments which are resources, capabilities, and core competencies.
Diversification: Pursuing diversification on strategy to acquisitions concerning the purchasing, production, and marketing and distribution system.
Ron Johnson spent a great deal of time and money to promote his ideas of “stores-within-stores” by turning floor space into an area to house several branded boutiques. He did this in order to attract a target market of a wider demographic which includes age, gender, and generation. One of the m...
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The topic under review is strategic alliances. This particular form of non-equity alliance between firms in the same industry (competitors) is becoming an increasingly popular way of conducting business in the global environment. Many different reasons of why such alliances are occurring have been recognized. These include: the increasing globalization of the world's economy resulting in intensified global competition, the proliferation and disbursement of technology, and the shortening of product life-cycles. This critique will use Kenichi Ohmae's viewpoint on strategic alliances as a benchmark for comparison. Firstly, a summary of Ohmae's article will be provided. Secondly, in order to critique Ohmae's opinion, it will be necessary to review other literature on the topic. Thirdly, a discussion of the various viewpoints and studies, that have hence arisen, will be discussed in detail. Finally, conclusions will be drawn with implications for companies operating in today's global environment, together with suggestions for future research on strategic alliances.
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This video provides an overview of product diversification. It explains that there are two types of diversification, which are related diversification and unrelated diversification. In addition, the video informs that diversification often involves merger and acquisition activities. Furthermore, it stresses the importance of keeping diversifications balanced, as in some instances, companies that do not take advantage of diversification, can miss out on some benefits, and/or could experience negative effects. However, on the other hand, the opposite could also occur, because some companies that over-diversify, extend themselves too far and can experience detrimental and disadvantageous effects as well. The key is staying
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IKEA is more than a furniture store they are a company driven by values (IKEA, 2014). The company seeks to make their consumers lives easier by providing them with modern, innovative, inexpensive products which they use to tackle daily home activities. IKEA Group has 298 stores in 26 different countries (IKEA, 2014). The company’s vision is “to create a better everyday life for the many people” (IKEA, 2014, para 1). Using innovative techniques for creating, producing, and marketing their products IKEA can provide consumers with durable products for reason...
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