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!
Rick will give weekly updates on one of the more community friendly companies in America.
Sunday, November 22, 2015
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!
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!
Wednesday, November 11, 2015
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
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
Sunday, November 8, 2015
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.
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.
Thursday, October 29, 2015
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!!
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!!
Sunday, October 25, 2015
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
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
Sunday, October 11, 2015
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
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
Sunday, October 4, 2015
Dick's takes advantage of Economies of Scale
As Dick's Sporting Goods has continued to grow their footprint throughout the United States, they've created their single largest cost advantage as compared to their competition. Their buying power with some of the largest athletic apparel manufacturers is second to none when it comes to the big box stores.
Typically when you are discussing cost advantages and economies of scale you are referring to large manufacturing companies. But when you consider these priniciples with retail organizations, it demonstrates the power of size and what that means for their contributions as it pertains to margin per unit. Dick's has an overwhelming advantage in the marketplace. Their greatest competitor on the national scene is Sports Authority and their footprint only equates to about 60% of Dick's. All the other competitors are regional in nature like Big 5 Sporting Goods. Unlike the manufacturing industry, these advantages can actually be seen in the stores. The next time you walk into one of these stores, take a moment and compare the levels of inventory or options that Dick's has in their offerings as compared to the others. Not only does Dick's use its cost advantages to improve margin, but they use these economies of scale to provide additional products and services that their competition simply can't do. They have used this important cost advantage to grow their product lines thus intriquing more diverse consumers to frequent their stores.
This not only allows them to continue to grow, it also serves as a life line when the economy goes through downturns or recession periods. They have a plethora of product offerings and the advantage to lower prices and create marketing promotions that help keep the stores busy when money is tight and consumers get nervous. Their margins do take a hit, but their buying power affords them the luxury to survive profitably.
Typically when you are discussing cost advantages and economies of scale you are referring to large manufacturing companies. But when you consider these priniciples with retail organizations, it demonstrates the power of size and what that means for their contributions as it pertains to margin per unit. Dick's has an overwhelming advantage in the marketplace. Their greatest competitor on the national scene is Sports Authority and their footprint only equates to about 60% of Dick's. All the other competitors are regional in nature like Big 5 Sporting Goods. Unlike the manufacturing industry, these advantages can actually be seen in the stores. The next time you walk into one of these stores, take a moment and compare the levels of inventory or options that Dick's has in their offerings as compared to the others. Not only does Dick's use its cost advantages to improve margin, but they use these economies of scale to provide additional products and services that their competition simply can't do. They have used this important cost advantage to grow their product lines thus intriquing more diverse consumers to frequent their stores.
This not only allows them to continue to grow, it also serves as a life line when the economy goes through downturns or recession periods. They have a plethora of product offerings and the advantage to lower prices and create marketing promotions that help keep the stores busy when money is tight and consumers get nervous. Their margins do take a hit, but their buying power affords them the luxury to survive profitably.
Saturday, September 26, 2015
Leadership is king!
There are many ways to evaluate companies these days. It seems as if every analyst has an economic model whether it's new or old to illustrate the strenghts and weaknesses of an organization. It's my opinion that great leaders are the true key indicators of the strength of an organization, whether that's in the near future or forward looking. If you look at some of the great american companies, their leaders are what drive sustainable success.
Philip Selznick's book titled Leadership and Administration, explored the ideas of institutional leadership and distinctive competence. Philip Selznick believes leaders "create and define an organization’s purpose or mission. In more contemporary terms, institu-
tional leaders help create a vision for an organization around which its members can rally." Philip not only believes the institutional leadership is what sets the vision, but it creates the distinctive competence on the core - "those activities
that a particular firm does better than any competing firms." I believe Philip's analysis is extremely accurate when you look at some of them most successful organizations around the world.
Dick's Sporting Goods is no different. Their CEO and Chairman Ed Stack has provided great vision, structure and support to his organization that has helped created the #1 Sports retailer in the United States. I've attached a few links that go back in time that helps outline what Ed Stack has meant to Dick Sporting Goods.
http://www.binghamton.edu/news/inside/news.html?issue=2007jun21&id=6
http://archive.fortune.com/2010/04/20/news/companies/dicks_sporting_goods.fortune/index.htm?postversion=2010042709
http://www.post-gazette.com/business/businessnews/2004/11/21/Ed-s-way-stacks-up-well-for-Dick-s-Sporting-Goods/stories/200411210231
Philip Selznick's book titled Leadership and Administration, explored the ideas of institutional leadership and distinctive competence. Philip Selznick believes leaders "create and define an organization’s purpose or mission. In more contemporary terms, institu-
tional leaders help create a vision for an organization around which its members can rally." Philip not only believes the institutional leadership is what sets the vision, but it creates the distinctive competence on the core - "those activities
that a particular firm does better than any competing firms." I believe Philip's analysis is extremely accurate when you look at some of them most successful organizations around the world.
Dick's Sporting Goods is no different. Their CEO and Chairman Ed Stack has provided great vision, structure and support to his organization that has helped created the #1 Sports retailer in the United States. I've attached a few links that go back in time that helps outline what Ed Stack has meant to Dick Sporting Goods.
http://www.binghamton.edu/news/inside/news.html?issue=2007jun21&id=6
http://archive.fortune.com/2010/04/20/news/companies/dicks_sporting_goods.fortune/index.htm?postversion=2010042709
http://www.post-gazette.com/business/businessnews/2004/11/21/Ed-s-way-stacks-up-well-for-Dick-s-Sporting-Goods/stories/200411210231
Sunday, September 20, 2015
Private Label Branding
We are seeing more and more private labeling across many industries in the business environment today. It's an opportunity to neutralize the threat of suppliers for many retailers. Dick's has great brand awareness throughout the United States and they sell all of the top brands like North Face, Nike and Under Armour. What would happen if the suppliers changed their business practices or created new partnerships with competitors, would this leave Dick's in a vulnerable position?
Maybe...and given Dick's own strength of brand, would it make sense for them to start going into the private label business and start selling their own brand of clothing and sports equipment? This strategy has worked out very well for other giant retailers like Costco and Target. Their own brands of Kirkland and Archer Farms respectively have become household names for many consumers. This strategy would help neutralize the threat of suppliers, especially suppliers that have so much control with their retailers.
I wouldn't be surprised to see "DSG" branded athletic apparel in the near future. Can't you imagine the mannequins greeting you in the store with a "DSG" logo'd shirt holding a golf club with the same branding!
How would you design the logo???
Maybe...and given Dick's own strength of brand, would it make sense for them to start going into the private label business and start selling their own brand of clothing and sports equipment? This strategy has worked out very well for other giant retailers like Costco and Target. Their own brands of Kirkland and Archer Farms respectively have become household names for many consumers. This strategy would help neutralize the threat of suppliers, especially suppliers that have so much control with their retailers.
I wouldn't be surprised to see "DSG" branded athletic apparel in the near future. Can't you imagine the mannequins greeting you in the store with a "DSG" logo'd shirt holding a golf club with the same branding!
How would you design the logo???
Saturday, September 12, 2015
THE FIVE FORCES MODEL OF ENVIRONMENTAL THREATS
Business leaders are often concerned with many aspects of their business. One of the models that most leaders look at is called the Five Forces Model of Enviromental Threats. These five forces are: (1) the threat of entry, (2) the threat of rivalry, (3) the threat of substitutes, (4) the threat of powerful supplier, and (5) the threat of powerful buyers. Dick Sporting Goods has many regional competitors, but as a whole they don't have a major competitor outside of Sports Authority who have stores throughout the country. But, when you look at this model a few of these threats really stand out. The threat of substitutes and the threat of powerful suppliers are the two greatest threats for Dick Sporting Goods. Amazon, the online retail giant plays this role better than anyone else. They offer another option for today's consumers who spend a lot of their time shopping online. Not only does Amazon offer a substitute to the typical box store, they have signficant buying power which makes them a powerful supplier of goods that can be offerred to consumers at cheaper prices than they can find "in-stores." The consumer can "window" shop at Dick's but potentially find the same product for a little less money at Amazon.com.
So, what can Dick's do to offset this threat? One of their strategies has been to drive goodwill in their local communities. I've blogged about this before, but it really is a key strategy to create customer loyality that entices their customer's to support their partner in the community.
Dick's also went on the attack with their own online strategy. They recently announced an ecommerce intiative where they are bringing their online platform inhouse. In 2014, their internet sales were up 28%, 31% just in the 4th quarter. It appears Dick's has analyzed these same threats and are going on the attack!
I've attached a link that dives deeper into this strategy.
Thursday, September 3, 2015
Intangible Resources - Competitive Advantage!
Good evening! One of the reason's I wanted to create a blog on Dick Sporting Goods is so I can help share with the world all the good that they do in their communities to help support youth athletic programs for those less fortunate!
Check out their latest inspiration and if you have the ability to help, please do so!
http://dickssportinggoods.sponsorport.com/
One of the measures to evaluating an organizations value is to look at intangible resources or resources that are difficult to measure like most assets. Dick Sporting Goods has developed brand loyality and created a bond with members of the community in which their stores operate. They've done this through a multitude of community projects. As I said, it's very difficult to measure financially, but it plays a large role in their success!
Be sure to support your local Dick Sporting Goods!
Check out their latest inspiration and if you have the ability to help, please do so!
http://dickssportinggoods.sponsorport.com/
One of the measures to evaluating an organizations value is to look at intangible resources or resources that are difficult to measure like most assets. Dick Sporting Goods has developed brand loyality and created a bond with members of the community in which their stores operate. They've done this through a multitude of community projects. As I said, it's very difficult to measure financially, but it plays a large role in their success!
Be sure to support your local Dick Sporting Goods!
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