Tag Archives: Acquisitions

Amazon’s Latest Buy – MGM Studios

Amazon is not a company that is content to rest on current successes. The company seems to constantly be innovating new products and technologies. And, when not innovating, Amazon loves to buy as much as its customers. The latest acquisition for Amazon is its purchase of Metro-Goldwyn-Mayer movie studio for a price of roughly $8.45 billion. While not as large as Amazon’s 2017 purchase of Whole Foods (at $13.7 billion), nonetheless it is a substantial investment that seems destined to take Amazon even further into the entertainment business.

The purchase appears to be an effort to increase its Prime Video streaming to help it compete with rivals such as Netflix and Walt Disney Co. By acquiring MGM, Amazon gains more than 4,000 films including key franchises such as James Bond and a strong TV catalog of 17,000 shows that includes The Handmaid’s Tale and more. Prime Video is an important element in Amazon’s customer retention strategy and gives consumers value to stay with Amazon’s membership program.

Other entertainment companies are not waiting around to see what happens. Discovery announced a $43 billion deal to merge with WarnerMedia after a spinoff from AT&T. Sports content also has Amazon’s attention – it signed a deal with the NFL to broadcast Thursday Night Football in 2022.

What will you watch next?

Group Activities and Discussion Questions:

  1. Discuss the four primary marketing strategies: market penetration, market development, product development, and diversification.
  2. Show a news video describing the Amazon purchase: https://youtu.be/msEU9hR6YP0
  3. Which strategy is Amazon using by purchasing MGM? Why?
  4. Discuss with class: Why did Amazon purchase MGM?
  5. Which competitors will be most pressed by this acquisition? Why?
  6. Discuss how grocery retailers will compete with the combined Amazon/MGM?
  7. How can these companies market their services to compete with the company?
  8. Is the MGM acquisition a good move by Amazon?

Source: Associated Press; New York Times; Wall Street Journal; other news sources

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Google Acquires Fitbit

Acquisitions can be tricky. Companies need to assess what markets to enter, and which products and services are needed for those markets. While it is common for food and beverage companies to use acquisitions to gain market share, it can be a tad trickier when combining technology companies. A key consideration is that companies find synergies that can be capitalized on when combining organizations.

A recent acquisition of interest is the purchase of fitness tracker pioneer Fitbit by search engine giant Google for an estimated $2.1 billion. The acquisition moves Google into a better position in the wearable technology market and gives Fitbit access to more resources, technology, and marketing. (However, there are still some outstanding issues with government regulators; use by Google of Fitbit data for advertising purposes is a concerns to regulators.)

Fitbit is a familiar company to most college students. Founded in 2007, the company makes watches and bracelets to track health information; it has an estimated 20 million active users. New Fitbit products include Fitbit Stress, featuring stress management tools and an ECG app to assess heart rhythm. Fitbit’s products are carried in 39,000 retail stores in 100 countries. Annual revenue in 2009 was $1.4 billion.

Fitbit’s overall market share has decreased dramatically since the introduction of Apple Smartwatch. Its market share of 4.7% is significantly lower than the market leader Apple at 31.7%, followed by Xiaomi and Huawei.

How do you track your fitness?

Group Activities and Discussion Questions:

  1. Discuss the four key marketing strategies: product development, market development, market penetration, and diversification.
  2. Discuss diversifications/acquisitions as a marketing strategy. When is this effective? When is it not effective?
  3. Show Fitbit’s Web site and products: https://www.fitbit.com/global/us/home
  4. Show Google’s products’ Web site: https://about.google/intl/en_us/products/
  5. Do these two companies complement each other? If so, now?
  6. Divide students into teams. Have each team develop a promotional plan that the companies can use to promote their combined value to customers.

Source: Associated Press; CNN News; Wall Street Journal; other sources

 

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Wear Lululemon Gear While Working Out on Mirror

Acquisitions can be tricky. Companies need to assess what markets to enter, and which products and services are needed for those markets. While it is common for food and beverage companies to use acquisitions to gain market share (consider Pepsi’s recent purchase of Rock Star beverages), it can be a tad trickier when combining other companies. A key consideration is that companies find synergies that can be capitalized on when combining organizations. Recently, Lululemon may have found a good acquisition as it expands beyond athletic apparel to acquire fitness equipment manufacturer Mirror.

Mirror is a high-tech, interactive mirror that streams workout classes, offers live classes and on-demand classes, plus more intensive one-on-one personal training session. Mirror launched in 2018 (and received an investment from Lululemon in 2019). The Mirror equipment is a low-profile mirror – yes, a mirror – priced at $1,495 purchase plus a $42 monthly membership fee. Personalized training is $40 per session. Lululemon has a strong brand and loyal customer following. In addition to its trendy athletic gear, it offers fitness classes in stores and online.

The acquisition is happening at a time when Americans have been impacted by Covid-19 and are working out at home instead of going to the gym. Even with new safety measures, many people are opting out of gym memberships in favor of home workouts.

Shall we work out inside today?

Group Activities and Discussion Questions:

  1. Discuss the four key marketing strategies: product development, market development, market penetration, and diversification.
  2. Discuss acquisitions as a marketing strategy. When is this effective? When is it not effective?
  3. Show Lulemon’s web site: https://shop.lululemon.com/
  4. Show Mirror’s web site: https://www.mirror.co/
  5. How do these two companies complement each other?
  6. Divide students into teams. Have each team develop a promotional plan that the companies can use to promote their union.

Source: Associated Press; CNN News; New York Times; other sources

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