Assignment 4

Enzo Takeshi Pastana Takahashi

Maria Clara Drzeviechi

1. What are the strategic options to Walmart to win the online retail battle? How the
acquisition of Jet will help Walmart in its strategy?

Walmart's options were to focus on organic growth by reinvesting excess cash flow in e-
commerce-related activities, joint ventures with third parties, or acquiring e-commerce
companies with the potential to outperform the competition. Walmart had rapidly grown its
online revenue but was still slower than industry leader Amazon. Since joint ventures take a
long time to negotiate and are sometimes difficult to implement when you have no control,
Walmart needed a bold move to jumpstart its e-commerce business. That move turned out to
be the acquisition of Jet.com Inc. (Jet) which began in July 2015, Jet's business model offers
incentives designed to divert customers away from Amazon. The company's website offered a
unique pricing scheme in which price adjustments were made to customers as they shopped
online, encouraging them to buy more than Jet had at its closest warehouse to the customer.
This makes it less expensive for Jet to ship and store the stock.

2. What are the critical factors (external and internal) that can impact Walmart´s postmerger
integration of Jet?

The critical factor that can impact Walmart’s postmergers integration of Jet are: access to its
attractive millennial dominated customer base; its ecommerce capabilities including logistics
and distribution; and its management team. Of these, the most difficult challenge for Walmart
to transition to an e-commerce retail model is likely to be changing its culture.

3. What is corporate culture? How corporate culture can impact the integration of Walmart
and Jet?

A common set of values, traditions, and beliefs that influence management and employee
behavior within a firm.

Corporate culture could impact both companies as it could create dissension among the vast
majority of Walmart employees who work hard in the brick-and-mortar business. Walmart's
culture can smother the spirit of innovation that makes Jet so inventive and get in the way of
Jet's management team by getting in the way of transforming Walmart's e-commerce
operations. In addition, specific issues faced between Jet.com and Wal-Mart, including the
availability of alcohol during certain office hours, a more casual office attitude toward
swearing, competing opinions on costs that are appropriate for the company incur may be
specific to these two companies.

4. Do you think that the Jet acquisition will be successful in moving Walmart from a largely
brick and mortar retailer to one having a much larger online business? Explain.

I believe that the Jet acquisition won’t be successful in boosting Walmart’s online business.
Although in the short term Walmart saw an increase in online sales of 29% in the US and 15.5%
globally after the acquisition of Jet, in the long term it doesn’t look as promising. This is
because the companies’ cultures are too different and large traditional businesses that acquire
small firms, often end up destroying them. Therefore, I don’t think that Walmart will be able to
not suffocate Jet’s entrepreneurial spirit and retain its teams.