Learning Goal: I’m working on a business question and need guidance to help me learn.
Please respond to the following in 2 separate paragraphs:
Be sure to respond to your classmate’s post below:
One of the most significant grocery chain acquisitions on the table is Kroger, with 9.9% of the grocery spending in the U.S.A planning to buy Albertsons Grocery stores with 5.7% of the grocery market. The Kroger and Albertsons deal is worth around $25 Billion, and it is expected to close in 2024.
Based on the firms’ characteristics and experiences, I do not think it will result in increased strategic competitiveness, and it will be the opposite. This merger will raise prices because of the humongous control of the local market. Based on the statement made by Kroger’s CFO, Gary Millerchip, to his shareholders in October: “We’ve been very comfortable with our ability to pass on the increases we’ve seen at this point. And we would expect that to continue to be the case” (3).
Understanding the acquired company’s culture is one of the problems affecting the acquisition’s success and which would be most critical to the global economy. Why? Investments are made to secure market share; Kroger and Albertsons are both mega grocery chains, making it a Market Extension Acquisition. To prevent failure using an acquisition strategy, one must genuinely understand the acquired company culture.
Most acquisitions fail due to overpriced stock, high management payroll, rivalry among employees, or demotivation of the acquired company. When these issues arise, there are catastrophic consequences that result in mass layoffs, a negative impact on brand reputation, a decrease in brand loyalty, lost revenue, increased customer costs, and sometimes permanent closure of the business.
Thank you,
Rupe.
Sources:
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