Kellogg’s—Merging an Acquisition
Kellogg’s entered the fruit snack market in 2003; the company is generally known for its breakfast cereals, including such stalwart brands as Corn Flakes. As with InterClean, the company added fruit snacks to its product line and then made an acquisition announcement within a very short period of time related to the new product line. Where InterClean did this with EnviroTech and its expertise in services, Kellogg’s did it with fruit snacks and its acquisition of the fruit snack division of Kraft Foods for $30 million (“Kellogg,” 2005).
Kraft marketed some of its fruit snacks under well-known brand names that included Nabisco, Capri Sun and Jell-O. However, when Kellogg’s made its acquisition, it did not acquire these names; they remain with Kraft which uses them for other products. Instead, Kellogg’s purchased the facilities and resources that Kraft used in order to manufacture fruit snacks. Kellogg’s also gained access to the Kraft distribution network; this might be similar to Kellogg’s own distribution network for its core products as well as its fruit snacks (grocery stores and convenience stores, for example) (“Kellogg,” 2005).
In considering the Kraft acquisition and its lessons for InterClean, the primary lesson is that Kellogg clearly understood how the acquired resources would be merged into the Kellogg organization before the acquisition took place. In the case of InterClean and EnviroTech, there was much speculation at both organizations as to how the two merged companies would operate. EnviroTech expects to be taking a lead role at InterClean; not surprisingly, loyal InterClean employees are feeling threatened. InterClean’s executives do not have a plan in place prior to the acquisition about how the two companies will operate as a merged entity, and clearly no cultural due diligence was performed, either. Lacking such a plan, the merged organization is likely to be characterized by mistrust and a lack of productivity that could well call into question the long-term success of the new organization (Coffin, 2006).
Dell—Expanding into New Markets
Dell was a successful manufacturer of computers that sold directly to consumers in its early days. It manufactured both PCs and laptops, and surprised much of the industry because it did not use retail outlets. Instead, it built computers to customer specifications using the Web. As it progressed, however, it recognized that it needed to redefine its strategy if it was to continue to be successful. While its initial strategy of selling to consumers was effective, this was a strategy that could be duplicated by other manufacturers that also used traditional retail outlets. Dell recognized that it could be more successful if it courted corporate clients who were likely to be more sophisticated users and thus require less customer support. In addition, corporate clients were more likely to upgrade their systems more frequently than home users and this also offered an attractive opportunity. Thus, like InterClean, Dell recognized that a new market—corporate customers—could provide significant growth opportunity for the company in the long-term (Fawcett, 1995).
Initially, Dell had to overcome resistance to buying directly from manufacturers, something that corporate customers were initially reluctant to do. This required educating the Dell sales force and cultivating specialists in corporate sales. In addition, corporate sales typically involve far more units per order than consumer sales; this required additional education for the company as a whole (Fawcett, 1995). By recognizing the education and training that would be required before the company made its media announcement, and by recognizing where there were synergies within the existing organization that could be leveraged, Dell made the leap to corporate and government sales successfully.
InterClean has set its date for its media announcement and is using that as its deadline rather than doing its research and setting its strategy in place and then making the announcement. In some ways, this is working backwards and could result in synergies being lost and in the company only alienating current employees—and current customers who may be left wondering how their needs will be met by the new InterClean that has many more products and services that may not be entirely in keeping with what current customers have come to expect from the organization. By developing its strategy and performing an internal audit of skills and resources without the pressure of a media announcement, the company can coordinate its efforts and realize the results it expects.