Last week, The CEO of the company came and told you that Ralph Lauren desperately needs to increase revenue, minimize costs, and/or increase market share. The CEO tells you that they are considering acquiring, merging and/or forming partnerships with the following companies:
Option #1: PVH Corp (Ticker Symbol: PVH).
Option#2: GAP (Ticker Symbol: GPS)
Option #3: Under Armor (Ticker Symbol: UA)
The CEO has given you the responsibility to analyze each of the following companies and decide what action you should take? Should your form a merger, an alliance, or try to acquire one of the above-mentioned companies? Should you take no action, why or why not?
In doing you analysis:
1. Better understand Ralph Lauren including its strengths and weaknesses, what are its major products/lines? What is their current strategy? What is their revenue like? Are they profitable? Where do most of their customers reside? How can they: 1) Increase sales to existing customers, or 2) Create new customers? Where are most of the clothes made? Is there a way to reduce cost while still maintaining brand name?
2. Understand each of the companies that you are considering a merger/acquisition/partnership with. What are their products/services like and how do they complement/compete with Ralph Lauren? Are these companies profitable? What is each of the companies’ market capitalization like (number of shares times price of the stock)? Do you have the cash to buy any of these companies, or would you have to provide cash and/or stock in the purchase negotiations? Note: In order to acquire a company that is larger than your own, you would have to issue a large amount of debt and then use that debt to pay (at market price) for the company.
3. How can you STRATEGICALLY build Ralph Lauren? USE YOUR OWN CREATIVITY and INNOVATION – this is real world stuff – companies make these decisions all the time!!!
Using the Internet, company financial statements on yahoo finance (all mentioned companies are public), CNN Money, Fortune, and any other resources you can find. There are a number of industry analysts that provide additional details about these companies.