Mba540 Week 2 Benchmarking

Week 2 Benchmarking

University of Phoenix

MBA 540

Maximizing Shareholder Wealth

Wild Oats

Wild Oats was founded in 1987 by Michael Gilliland and his wife, Elizabeth Cook, with the purchase of the Crystal Market vegetarian natural foods store in Boulder, Colorado. With no experience in the natural foods business, the founders relied on the expertise of their employees and the wealth of natural product knowledge in Boulder to build Crystal Market into a thriving business. In 1991, Wild Oats opened their first supermarket-sized store in Santa Fe, New Mexico. In 1992, Crystal Market was re-named Wild Oats Vegetarian Market, and in the ensuing years the company began opening and acquiring other, small natural foods stores.

In 1993 and 1994, Wild Oats was named one of the "500 Fastest-Growing Private Companies in America" by Inc. Magazine. In 1996, it became a public company traded on the NASDAQ Stock Market. The Wild Oats story continued with a period of rapid growth through acquisitions and new store development, which peaked in 1999 with the addition of 47 stores in a single year. Wild Oats operated 109 stores in 23 states and British Columbia, Canada (CapersÐ'™ Community Markets) at the time it merged with Whole Foods Market in August of 2007.

Wild Oats merged with Whole Foods Market to form a giant in the natural food market, but also because Wild Oats had accumulated an enormous amount of debt. While opening new stores at a frantic pace, the natural food market began to feel the economic pressures of the last few years and sales margins decreased sharply. As debt began to quickly consume the company, Whole Food Market expressed interest in a merger. Whole Foods Market was willing to assume all of Wild Oats' debt and would allow the company to keep all stores.

Lester Electronics has grown in its industry to become comfortably established. Lester Electronics has been so successful that now Avral electronics wants to acquire Lester to capture Lester's market share. Like Wild Oats, Lester Electronics is facing a dilemma that would go away if they were to be acquired. For Wild Oats, it was debt. For Lester, it is potentially losing Sheng-wa as its exclusive supplier. For management, it is a tough decision, but in Wild Oats' case, they did what was believed to be the best option for the share holders and for the current employees of the company. Lester's CEO will have to make the same decision.

General Electric

1876 was also the year that Thomas Alva Edison opened a laboratory in Menlo Park, New Jersey, where he could explore the possibilities of the dynamo and other electrical devices that he had seen in the Exposition. Out of that laboratory was to come perhaps the greatest invention of the age - a successful incandescent electric lamp.

By 1890, Edison established the Edison General Electric Company by bringing his various businesses together.

During that period, a competitor emerged. The Thomson-Houston Company became a dominant electrical innovation company through a series of mergers led by Charles A. Coffin, a former shoe manufacturer from Lynn, Massachusetts.

As both businesses expanded, it had become increasingly difficult for either company to produce complete electrical installations relying solely on their own patents and technologies. In 1892, the two companies combined. They called the new organization the General Electric Company.

Several of Edison's early business offerings are still part of GE today, including lighting, transportation, industrial products, power transmission, and medical equipment. The first GE Appliances electric fans were produced at the Ft. Wayne electric works as early as the 1890s, while a full line of heating and cooking devices were developed in 1907. GE Aircraft Engines, the division's name only since 1987, actually began its story in 1917 when the U.S. government began its search for a company to develop the first airplane engine "booster" for the fledgling U.S. aviation industry. Thomas Edison's experiments with plastic filaments for light bulbs in 1893 led to the first GE Plastics department, created in 1930.

Throughout its 132 year existence, GE has been a company of constant change, always acquiring new companies or selling off various sub-businesses. During the 1980s, CEO Jack Welch brought new competitive attitude to GE through tough leadership that demanded each sub-business be of the top 3 in its industry, or quickly growing towards that goal. If a company did not perform to his satisfaction, they were sold to the highest bidder. Jack Welch not only cut off the bottom feeders (most of these were well above average by most CEOs standards), but he also aggressively sought to add new businesses to GE's portfolio. With the financial means to purchase almost any company in their path, GE is known to be one of the most active acquisition businesses around.

The Lester Electronics scenario has multiple potential acquisitions or mergers that could happen, all of which are normal actions for GE. While the companies involved in the scenario are nowhere close to the size of GE, they are all currently looking to grow or strengthen their market share. As GE demonstrates, growth through mergers and acquisitions