Reference no: EM132969151

List and describe in detail at least five sources of value potentially realized from Walmart's acquisition of Lululemon based on the assigned role.

Here are some reference from our discussion:

Is it that LULU products wouldn't sell in a WMT or that LULU customers would devalue the brand and not shop in the LULU stores? WMT customers are therefore price and so if the price is right, they might buy LULU in the WMT store but what does this mean for the LULU stores? What if they only sell product that is 1 or two seasons out of date? Keep asking good questions and don't be afraid to use a lot of scenario analysis.

The synergies between Walmart and Lululemon. Personally, I think Lululemon can benefit largely from the supply chain and the financial backing of Walmart to expand internationally. However, there are many differences between the two companies based on the brand that have been built. Walmart is known as a low price brand, while Lululemon is high-end athleisure apparel that wouldn't be looked at twice by typical Walmart shoppers. Clearly Lululemon products wouldn't sell well in Walmart stores.

I think this is exactly what walmart may try to change about their perception and customers as "synergy" with this deal. Attracting customers who are both interested in low-price as well as high-end products. This puts them better place to deal with online retail competitors like Amazon. Lululemon products wouldn't sell well in Walmart stores due to the conflict in brand identity and strategy. To maximize the value and synergy, I think keeping Lululemon separate from Walmart's core business would be the best way. For example, Lululemon/Walmart will continue to sell its products in-store sales at Lululemon stores and online shopping at Lululemon's website as well as at Walmart.com, but not at Walmart stores. Thus, the revenue will grow because of the increased sales channel while reducing SG&A of Lululemon by utilizing Walmart's scale and well-established supply chain/operation.

There is a potential for a loss of identity if Lulu starts selling their products within Walmart, as this has the opportunity to cannibalize the foot traffic from brick-and-mortar Lulu stores. Walmart and Lulu could make decisions on an individual basis, and if no Lulu stores are within a certain geographic distance, then Walmart can carry new Lulu products, but for other more urban locations maybe rethink this idea. WMT as brick and mortar low-cost store; however, I think in the last 5 years WMT is actively developing Walmart Marketplace that should compete with Amazon and other online platforms in a future. A quick search in Walmart Marketplace and you can see that they even sell high brands like Gucci. I feel like this could be another potential place to gain synergies from merger.