Mergers and Acquisitions

What's more exciting for an organization than a acquisition...especially if you are on the acquisition side! Dick's has not been involved in too many of these transactions over the last 10 years, but one important one took place back in 2007.  Dick's agreed to purchase Chick's Sporting Goods for $41 Million. I've attached the link that details the transaction:


http://www.prnewswire.com/news-releases/dicks-sporting-goods-agrees-to-acquire-chicks-sporting-goods-59884972.html


What's almost as exciting are the rumors of an acquisition. Earlier this year, Dick's was thought to be on the block and prime target for Equity Firms. I've attached another link to an article that illustrates just how that could have happened.


http://www.streetinsider.com/Analyst+Comments/Dicks+Sporting+Goods+(DKS)+Could+Be+Acquired+in+Mid+$60s,+Says+Deutsche+Bank/10146468.html


What's interesting is what these rumors do to the stock price. The attached article does a nice job of showing how speculation can manipulate the stock price of an organization like Dick's!

Strategic Alliance - How Dick's continues to grow!

A plethora of large companies invest in strategic alliances or at least consider them often.. Dick's Sporting Goods is no different. In April of 2012 they entered into a strategic alliance with JJB, a UK Retailer. 


I've attached a link to an article that illustrates the transaction:


http://www.thedeal.com/content/restructuring/dicks-sporting-goods-to-invest-in-jjb.php


You can see this alliance / investment provides Dick's with an active growth opportunity outside it's normal business model. It will be interesting to see how this plays out over the next 5-10 years.


Enjoy!

Organizational Structure

The corporate world relies on executive leadership to move their organizations through many mazes of success and failures. The level of sustainability within these organizations is very much determined by the structure of the leadership team. I wanted to share the organizational chart that guides Dick's Sporting Goods.


Dick's leadership team has done a masterful job of directing the companies strategies and tactics through all the different swings in the economy over the past 10 years.


The link provided will give you further insight on the key executives that run DSG. It's not easy gaining full insight to company's organizational chart.  A lot of companies won't post them. The link below gives you an opportunity to sign up for further information related to the key executives.


http://www.theofficialboard.com/org-chart/dick-s-sporting-goods-2

Corporate Diversification - Does it hinder DSG?

Dick Sporting Good's has implemented a strategy of limited corporate diversification. They only operate in a single industry for the most part. Some could argue that their offerings touch a few different industries but in reality all of their goods fit in the same athletic, fitness and outdoor sport offerings. All of their retail offerings do provide them with some diversification for the consumer which does provide them with several key advantages. It allows them to touch several different types of consumers who enjoy all of the different offerings.


The limited corporate diversification strategy doesn't limit what Dick Sporting Goods can accomplish. Their model has proven extremely effective over the years. Not only does it provide a sustainable future it provides them with several cost advantages over it's competitors. They are indeed the dominant player in the industry and with their size and scope in the industry they will continue to lead the way in terms of revenue generation and profitability.

Advantages of Vertical Integration

Dick's Sporting Goods doesn't invest in vertical integration stategies like most companies do. Since they are a retail giant, their strategies are a little different. They have chosen a route in which they acquired the rights to some of their top brands and have vertically integrated those brands into their retail strategies. Top-Flite Golf clubs and apparel are one of those brands. They now have more control over the manufacturing and output of these units.

You could also look at some of their private lables and private brands that fall under DSG. This is another form of vertical integration that allows the company to drive efficiencies into their stores and increase profit margins.

A future strategy could be for DSG to bring in their own company employed installers for their fitness equipment and outdoor sports equipment. Today, they use outside contractors for these in-home installations. This would allow them to lower the costs to the customer and provide a superior service as well. It would also keep all the control of the sale in-house, thus creating more efficiencies.

Dick's will need to continue to look for ways to take advantage of future vertical integration opportunites to stay ahead of it's "creeping" competitors.

Happy Halloween!!

DSG 's reputation is greater than the rewards of collusion!

I've spent a lot of time researching collusion in the retail industry. Specifically, I was trying to find anything that would have put Dick Sporting Goods in the news. I found it difficult to imagine that after all the years Dick's has been in business that I couldn't find anything outside of a humorous artcile about a competitor's CEO tryinig to get an inside look of the shipping practices of Dick's by going undercover!

Dick's believes their reputation and the service to their communities is one of their core responsibilities that their senior mangement team must manage.  I've attached a link that illustrates this importance!

http://media.corporate-ir.net/media_files/irol/13/132215/corp_gov/code_ethics_0205.pdf

I posted the following link just because I found it funny!

http://www.dailyfinance.com/2014/03/03/warren-buffett-investment-advice-modells-ceo-spy-dicks-sporting-goods/#!slide=2128995

Product differentiation - SPORTS MATTER

It's really difficult to use product differerentiation as a competitve advantage with large retailers. Dick's Sporting Goods is no different, as it's products are very similar to their competitors. As I mentioned in a previous post, they can use their buying power and size to offer their customers a greater span of products. But, all in all those products aren't a lot different than what Sports Authority or some of the others can put in their stores.

That being said, I still believe Dick's has an advantage with product differentiation based on how they have differentiated themselves through community service. Dick has no competitors when it comes to what they do for their communities and youth sports. Their programs create a loyal customer base and also create a future customer base by the impact they have on the young kids who benefit from their generosity.

Check out the attached video to see just how they impact their local communities.

"Dick’s Sporting Goods: Sports Matter "

https://www.youtube.com/watch?v=LhzS5_stAvs