Mergers that don’t merge.
Discussion going on over at Tom Peter’s blog re the Sears, K-Mart merger and how it’s not working. But do mergers ever work? Quick, name one! And, why, why not?
In this case, the merger was prompted largely out of - as far as I can tell - sheer desperation in the face of growing competition from (cue the Star Wars Death Star music) - Wal-Mart. Doing anything from panic is a recipe for failure. Further, both companies had/have more problems than “simply” competition. Sears’ product & service reputation has been declining. (Talk to me about my refrigerator some time, grrrr). And, K-Mart is a poor third to Big Box Wally and Super Cool Tarzheey (In my admittedly limited experience, K-Marts are messy, poorly lit, smell bad and just aren’t “cool.”) All that said, both companies have lots of customers, some good locations and good ideas here and there. So, why couldn’t they get it together? (No fair peeking at the NY Times article Tom quotes.)
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November 8th, 2005 at 6:00 am
I think mergers between well established companies are always doomed to fail. There’s simply too much entrenched corporate culture in each company for the merger to go smoothly - few people like change. I think simple partnerships where the companies remain themselves but co-operate on certain things, are the way to go.
PS: the link you gave seems to be broken.
November 8th, 2005 at 10:01 am
Thanks, I fixed the link.
Re cooperation - absolutely! However, that can also be a sticky wicket as companies bump egos and sales forces there too.
November 8th, 2005 at 1:50 pm
“My ad is better than *your* ad”…I know the feeling. I did try to come up with a systematic solution to this problem once. The results were interesting if not entertaining!
November 8th, 2005 at 11:28 pm
The PepsiCo merger with Quaker Oats was a great success and continues to be a great marriage. The Execs of both companies took their time to find a compatible partner. The good for you Oatmeal compliments the good for your Tropicana orange juice. The wholesome Quaker snacks, like the Rice Cakes, Granola Bars and Cinnamon Teddy Bear Graham Crackers round out the FritoLay family of snacks. The Gatorade helps PepsiCo complete their Beverage line. That is why I continue to buy their stock. It’s a great investment for the long term. They strive for Continual Improvement. They have had a Strategic Plan from the beginning. A rare breed indeed!
November 14th, 2005 at 6:18 pm
I first shook my head after reading about the newly combined Sears and Kmart trying to work a deal to sell Lands End clothing. The CEO of Lands End, Mindy Meads left right after the plan was announced.
Now - from the Sears/Kmart end - I can see how they would have liked to have a well known quality brand of clothing to sell in their store - but I think it would be a disaster to Lands End, cheapining the brand horribly. Call me a snob, but NOBODY I know would be caught dead buying clothing in eitheir kmart or sears.
Don’t get me wrong - I’ll buy towels there, or a screwdriver, or an alarm clock - but I’m not buying fashion. period.
The whole thing made me wonder what all parties involved were thinking.
Holly
November 15th, 2005 at 9:16 am
Okay, full disclosure - I dashed into K-Mart this summer to buy some camisoles that I love for summer wear…after doing research on the web about the stores that stocked them (and no way was I going to - shudder- Wal-Mart)…after Target was out of my size. But, it was a lightening fast trip and only done out of sheer desperation (dark glasses firmly in place!) So, how COULD Sears and K-Mart get cool? They’re so far behind, I can’t think of anything. Although the Sears Ty Pennington commercials are sorta “cute” - they don’t make me want to dash to Sears.
All that said, maybe it’s like the recent political campaigns…Sears and K-Mart’s goal is (or should be) to get the base out, versus making any converts.
And methinks that Lands End fell victim to good ol’ fashioned short-term greed.
September 13th, 2007 at 7:37 pm
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