The competition witnessed in the business world has attracted several strategies deem at helping the organizations and businesses to skyrocket the benefit and maintain a strong competitive hold in the market. Mergers and acquisition form some of these strategies enabling the companies’ synergies production. The main idea behind is cumulative returns realized by the combined companies as compare to the effect of the companies solely in the market. In most cases, strong companies buy small companies with the aim of becoming competitive. The small companies realize the benefits of having a large market share, therefore, agreeing to come together as one. Mergers entail business groups that realize the risk of extinction unless they combine forces (Rhodes, 2010).
Wal-Mart stores are a company retail trade company located in USA, but with branches in over15 countries. The company enjoys a profound market share with retail ends for serving over 200 million customers in the world. The Wal-Mart forms the most extensive retail organization owing to the fact that it has over 8400 retail units. Customers enjoy the wide variety of products available at Wal-Mart. The company faces stiff competition both at the international level and the local level. Internationally, Wal-Mart competes with departmental store such as Target, ShopKo and Kmart among others. Locally, the company competes with dollar stores (Walmart.com 2012).
In February 2012, the company announced full acquisition of VUDU Inc., which is a revolutionary service that delivers instant access to movies. The consumers are offered an easier opportunity of accessing these movies and ample TV show directly to their studios at home. The payment for these services is favorable, and consumers are in a position enjoy the new release of movies and series in the market. VUDU is licensed to stream over fifteen thousand movies from different producers. In addition to producer partnership, VUDU has partnered with other popular sites in the world that connects and enhances interaction of people.
Acquisition of this company is an effective strategy by Wal-Mart Company. The company will manage to market its products to a larger group of individuals. Wal-Mart stands realizing benefits from the VUDU Apps in marketing and changing the image of the company. In this aspect, Wal-Mart will raise the value, quality and convenience. According to the VUDU executive vice president, the company will become a subsidiary of the Wal-Mart. The acquisition will necessitate Wal-Mart customers to enjoy wide choices of marketing avenues as they adopt digital shopping over physical shopping. Therefore, the acquisition strategy was a well-planned approached deem at helping the company to remain competitive. The move was in the wake of the growing “click’ marketing strategies that allow employees to purchase commodities and products via online bid. Embracing VUDU apps will also synergize the promotion and adverting strategies of the company since social media, which forms a compact part of VUDU apps attract millions of subscribers (Walmart.com 2012).
One of the Companies that do not have a history mergers or acquisition is Family Dollar. Family Dollar is regional chain store with various branches in 45 United States and District of Columbia in Canada. The company has over 71, 000 stores whose headquarters are located in Matthews North Carolina. The store deals with clothing, assorted household products and food items most of which cost 1-10$. It is registered in the New York Stock Exchange and is one of the publicly held companies. The company has survived through planned takeover, most recent being by Nelson Peltz’s Trian Fund Management LP which had proposed a $55-$60 per share. The company has been criticized by locals because it has a negative effect on residential property values (Familydollar.com, 2012).
When it comes to merging, companies of similar magnitude, with compatible products can come together to form a strong competitive formula for marketing and advance their business ideas. In the case of Family Dollar, such a company is Dollar General, which is a similar chain store. Dollar General has lesser stores about 10, 000 across 40 States. Dollar General Headquarters is Goodlettsville, Tennessee. Its stores are found in strip malls and small shopping plazas in local neighborhood with small communities. Most of its products retail for more than $1 with price points just like Family Dollar one of its competitor. Dollar General stock shares were taken by a private investor in 2007 by a private equity investor at a cost of $22 per share (Familydollar.com, 2012).
Why merge Family Dollar and Dollar General? The two companies deal with the same nature good and portray the same kind of expansion plans. Family Dollar plans to establish 500 additional stores in 2013 while Dollar Genral has plans to open 625 new stores spread across the 35 states where it is already operating. This means that the two have relatively the same growth patterns. Dollar General has partnered with motorsports, which sponsors motorsports series and has come up with a brand DG which represents an inexpensive household brand with products sold by the Dollar General stores.. These two companies can increase synergy amongst themselves by expanding each other’s plans and filling in the gaps left by each other. This improve their market base as well as share price in the stock market due to increased profits and stable market.
Wal-Mart international business strategy comprises of three factors. The first strategy is the low cost strategy. Wal-Mart manages to convince its consumers that the products are sold at low prices. Consumers will, therefore, prefer purchasing their product and overlook the quality, value and convenience of Wal-Mart products. In essence, Wal-Mart strategy of low cost is a misconception among the competitors and consumers who interpret the strategy as low price. The low cost strategy reduces the number of employees shopping in the small scale retails, consequently boosting the number of loyal employees of the company. Secondly, Wal-Mart uses differential strategy that entails selling different categories of products. This strategy edged out competitors who are unable to manage the wide scale of products at an effective way. Combined with the ability to low cost of the products, Wal-Mart maintains a clear lead in the competition.
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International corporate-level strategy employed by Wal-Mart comprises of two broad approaches; cost leadership and product differentiation. The company offers transportation; warehousing, logistics and communication strategies reduce the cost of the products being sold in Wal-Mart stores. Competitors are left with the only solution of lowering the prices of the products. Consequently, they end up incurring losses since such new ventures have no sound programs and strategies to reduce the cost of the products (Walmart.com 2012). Increased cost plus limited varieties enables the company to maintain a lead in the competition.
Internationally, consumers are offered an opportunity to select order and even purchase products online. Merging with VUDU opened up the doors to capturing several numbers of individuals using online services. The Brick and click model of selling and buying of goods reducing the hustles that one has to undergo in widow shopping. Customers can access the internet at their own free time place an order for the goods that they may wish to purchase. Consequently, customer will prefer such company over those others that require physical availability for successful purchasing of the products.
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Involvement of stakeholder in the management level is also an international corporate strategy that the company has identified to reduce the cost of production (Gallugher, 2008). The corporate is characterized by fewer management ranks. These ranks offer the company an effective approach for reducing the operational cost; thus, potentiate use of low cost products. The fact that the company is also able to purchase stocks in large quantities, offers another avenue for reducing the cost of production.
A recommendation aimed at successfully maintaining the competitive muscle in the market will depend on level with the loyalty level of the customers. Therefore, it should lay emphasis on the improving the value, quality and consistency of their products to meet the level of their competitor. The company should also strive to make sure that the mentality already developed regarding low prices is stools are difficult now and argumentum. Those who were
One of the corporate-level strategies, which are concerned with the overall strategy of a company, is a number of businesses into which Family Dollar should compete in. This is through strategizing, integrating and coordinating the individual stores into various businesses. Corporate strategies are what make a solid business stand and not solely the individual stores. For chain stores such as Family Dollar, the best corporate strategy is diversification. This is through capitalizing on the interrelationship between stores. Sharing skills and sharing experiences and activities will help in diversification.
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Family Dollar deals with household goods, clothing and food items which mean it has more capacity to diversify its competitive market in other related sectors such as soft drinks and beverages, and fast foods. This would raise the profits. Unlike portfolio management, which requires a highly developed capital market, and restructuring which no longer raise the shareholder value in the long run because of its bulky conglomerate production, diversification seems the best option for Family Dollar given its many chain stores (Familydollar.com, 2012).
In any organization, the main task is consumer satisfaction so as to ensure high profits and returns. This is the work of business-level strategies, which come up with ways to make sure that the consumer receives value for his/her money in response to quality products. Consequently, organizations and companies develop a competitive ability to exploit various products and markets. This relates to a company’s stand in the business world in relation to competitors and their competitive influence on the company.
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When it comes to business-level strategies, Family Dollar seems best suited to use differentiation. This is when the value of products given to the customers has unique features and traits instead of lowering the prices. Differentiation is done through intense and rapid good innovation, excellent customer services and high quality product features. Also, use of advanced technology in product features and maintaining a good image of the products helps in differentiation. Intel and Rolex use this strategy.
Family Dollar can create high value by lowering consumer costs (Familydollar.com, 2012), which translates to less complain and fast responses to the few problems experienced by buyers. Raising consumer performance, the buyers have more enjoyment, and by coming up with barriers through unique and reputed products, sustainability is enhanced. This develops high and switching costs adding value to the company through unique differentiation.
In cases of rivalry, consumers are less likely to be sensitive to increase in prices due to brand loyalty as long as the company satisfies their needs. On the side of suppliers, even if differentiators charge a price, they can pay for it since consumers are more willing to pay extra. Again, brand loyalty assist is beating off substitute products in the market as the substitutes find it hard to overcome brand loyalty. If Family Dollar can apply differentiation, it would grow to be an international company. Being a small scale retail trade, the company should consider campaigning extensively for their sale of products. The retail should consider or selling products that are in high demand, in the market. Such products include phones and electronics.