The annual percentage of conglomerate mergers was higher than horizontal or vertical mergers from 1980 to 2000, ranging from 50-80%. There was no significant change until 2000. After 2000, the percentages of the different merger types changed significantly due to industry changes. After 2005, all mergers were conglomerate mergers. The percentage of mergers occurring outside the industry has consistently been around 70-80% since 1979, while within industry mergers have been 20-30%.

1. Group Profile
Group: Trend setters

2. Porter’s Five Forces Model
Industry Rivalry
Toyota Prius
The Nissan Leaf
The Chevy Volt
(moderate to high)
Threat of Substitute
Plug-in hybrid electric vehicles.
(moderate) Threat of Entrants
Fisker,
Coda,
Azure Dynamics,
Bright Automotive, and others
(low)
Power of Buyers
“Supercharger”
unprecedented price-protection
(moderate to high)
05
01
02
04 03
Power of Suppliers
(Moderate) in manner
01

3. PEST Analysis
The Chevy Volt
The Roadster
All-electric sedan
Gas was selling close to
inflation adjusted all-time lows.
They were buying them to
make a statement about the
environment.
Social Technological
The Model S of Tesla cost $500
million to develop; offsetting that
cost was a $465-million loan
In 2015, there were still 28 states
that banned direct sales, making it
extremely difficult for Tesla to enter Political Economic

4. 01 02
03
Business-Level Strategy
Sales Services
Manufacturing through Automation
Distribution of products
Marketing technique
Corporate-Level Strategy
Purchasing Automobile Factory
Tapping the Mainstream Market
Raising Investment to Pay Off Loan
Future Strategic Options
Opening a Gigafactory
Introducing Powerwall
Strategy Analysis
01

5. NPM
-2.00%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
US-Industry Average-NPM* Retailing industry -NPM
NPM
The net profit margin measures how much
net income or profit is generated as a
percentage of revenue
Or,
ATO
The asset turnover ratio measures the value
of a company's sales or revenues relative to
the value of its assets
02

6. ATO
0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
160.00
180.00
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
US-Industry- Average-ATO** Retailing industry -ATO
The retailing industry is turnover dominant
The retailing industry is efficiently using its invested
capital that results in higher revenue relative to invested
capital. Which also indicate the industry is also increase
its sales revenue over the time thereby increases
profitability.
02

7. %in average
ME
Brick Mortar Retailer
Online Retailer
IAI
Brick Mortar Retailer
Online Retailer
Retailing Industry
03
2.34%
.81%
4.86%
23.50%
NPM
Brick Mortar Retailer
Online Retailer
86.11
44.94
ATO
Brick Mortar Retailer
Online Retailer
20.67%
26.09%

8. NPM-Net Profit Margin
-1.00%
-0.50%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Brick-mortar-retailer-NPM Online-retailer-NPM
0.00
20.00
40.00
60.00
80.00
100.00
120.00
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Brick-mortar-retailer-ATO Online-retailer-ATO
What’s the observation?
ATO-Asset Turnover
The average net profit margin and the average total asset
turnover is lower in case of Online-retail industry
03
Retailing Industry

9. Intangible Asset Intensity
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Brick-mortar-retailer Online-retailer
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Marketing Expense
Brick-mortar-retailer Online-retailer
What’s the observation?
The average intangible asset intensity and the average
marketing expense of retailing industry is higher compared to
those of Brick-mortar-retailer
03
Retailing Industry

10. Is there any strategic Groups?
A big YES
Though both the Brick-mortar-retailer and Online-
retailer perform the same business, serve the similar
types of customer but due to some strategic factors that
generally exist in the strategic groups, their performance
is different.
03

11. 0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Price to book ratio
Brick-and-Mortar Online
04
0.000
0.500
1.000
1.500
2.000
2.500
200120022003200420052006200720082009201020112012201320142015201620172018
price to sales ratio
Brick-and-Mortar Online
Brick-and-Mortar Vs Online Retailers
(market price difference)
Price-to-Book ratio and Price-to-Sales ratio from 2001
to 2018 of Brick-and-Mortar and Online retailer we can
found that the online retailer has higher price-to-book
ratio as well as higher price-to-sales ratio relative to
Brick-and-Mortar industry
This indicates that the online retailer has higher potential
growth possibility which increases its value to its customers as
well as investors. And finally, the investors are willing to pay
higher price than online retailer’s book value. Due to better
execution of different strategies the online retailer is
outperforming thus the equity market price is different.

12. Story and the Business Model
The Business Model
Every Day Low Price
Checking on competition
Empowering employees
Technology supported innovation
Distribution
Sam Walton decided to open a Walmart independently
in 1962 with his brother Bud. By the early 70s, Walmart
had expanded to 30 stores across the Midwest of
America — and proven the Ben Franklin directors
wrong along the way. Though founder Sam Walton
passed shortly after in 1992, his legacy still remains in
the behemoth of a company Walmart has become, with
over 2.2 million employees, 11,000 stores, and $500
billion in annual sales.
The Story
05

13. Walmart’s Competitiveness
Money Back Guarantee
Online Grocery
Walmart Pickup
Savings Catcher & Ad
Match
L
Every Day Low Cost (EDLC)
Pickup Today
.
Rollbacks
Every Day Low Price (EDLP)
05

14. The United States has well-established distribution channels for all types of retail companies. Total retail sales
(including motor vehicle and parts sealers) from 1 million retail establishments in the United States
surpassed $5 trillion in 2017. The U.S. retail industry directly employs about 29 million people and supports
more than 42 million jobs.
The National Retail Federation estimates that in 2017 retail sales increased by 3.9 percent, and e-commerce
sales increased 13 percent in the same period. Numerous opportunities for growth exist in the U.S. retail
market for retail providers of all sizes, including individual direct marketers or direct sellers, small- to
medium-sized franchise unit owners, and large “big-box” store operators. In 2017, FDI in the U.S. retail
industry reached $88.6 billion.
06
US-Based-Retailing Industry

15. 06
Costco
Coming in with almost $141
billion in sales in 2018 alone,
a 9.7% growth from 2017
Walmart
$387 billion in sales in 2018 across
their more than 5,000 stores
nationwide
Kroger
Remains strong with over 3,000
stores and $119 billion in sales
in 2018,
Amazon
Each month, over 197 million
people globally visit Amazon.com.
In 2018, their U.S. commerce
market share was 49%
A
B
C
D
4 Retailers Propelled US-retail Industry

16. 07a
Yes
Herb pointed it rightly that within-the-state
buses/coaches can be an Airline’s competitor
Why?
In the U.S., while a much smaller bus market
than Mexico, about 60.9 million people took
intercity buses to their destinations in 2015, up
22 percent year-over-year, according to U.S.
Department of Transportation data. Greyhound,
one of the largest U.S. bus lines, had 18 million
passengers in 2015 with more than 5.4 billion
passenger miles per year.
Yes
The aviation industry’s ‘competitor mapping’
are different in within-the-state cases & across-
the state-cases
Why?
If we look at the southwest airline’s strategy, they follow
different strategies to control the market and create passenger-
friendly experience within the state and across the state
Southeast and America West Airlines follow cutthroat fare
model in terms of as much low price possible, run television
commercials promoting the supremacy of their own service and
strategically downplaying each other, competition between the
two for reducing the unrestricted fare to $36 from phoenix to
Los Angeles and 9 routes where they compete.
Aviation Industry’s competitor mapping

17. Southwest Airlines is a good example of a successful blue ocean strategy execution. According
to the consulting firm Blue Ocean Strategy Partners, Southwest tapped into a customer base
that preferred driving to air travel due to the lower cost. Instead of competing with other
airlines, Southwest positioned itself as an alternative to cars and offered reduced prices,
improved check-in times and increased flight frequency. “This new combination created an
offering that enabled the customer to benefit from the high traveling speeds of an airplane at
low prices combined with the flexibility of traveling by car.
Blue Ocean Strategy
07b

18. 08
0%
20%
40%
60%
80%
100%
120%
1975 1980 1985 1990 1995 2000 2005 2010 2015
Yearly %
Horizontal Vertical Conglomerate
Year Horizontal Vertical Conglomerate TOTAL
1980 7% 13% 80% 100%
1981 31% 20% 50% 100%
1982 32% 23% 46% 100%
1983 31% 20% 49% 100%
1984 37% 14% 49% 100%
1985 30% 14% 55% 100%
1986 29% 15% 56% 100%
1987 28% 15% 58% 100%
1988 25% 16% 59% 100%
1989 27% 14% 59% 100%
1990 28% 15% 57% 100%
1991 29% 13% 58% 100%
1992 30% 14% 55% 100%
1993 30% 14% 57% 100%
1994 38% 19% 43% 100%
1995 43% 4% 53% 100%
1996 33% 12% 56% 100%
1997 15% 15% 69% 100%
1998 38% 19% 42% 100%
1999 33% 33% 33% 100%
2000 0% 0% 100% 100%
2001 100% 0% 0% 100%
2002 0% 0% 100% 100%
2003 50% 0% 50% 100%
2004 0% 33% 67% 100%
2005 0% 0% 100% 100%
2011 0% 0% 100% 100%
The annual percentage of conglomerate merger is higher than that of
horizontal and vertical merger from 1980 to 2000 and there was no significant
change in the percentage till 2000. But there was significant changes in the
annual percentage of the three respective merger after 2000 to 2005 due to
significant changes in the industry level. After 2005 all the mergers were
conglomerate mergers so there were no horizontal and vertical mergers.
Mergers and Acquisition

19. 09
year
Annual %
total
Outside Industry Within Industry
1979 0% 100% 100%
1980 100% 0% 100%
1981 78% 22% 100%
1982 74% 26% 100%
1983 78% 22% 100%
1984 76% 24% 100%
1985 77% 23% 100%
1986 71% 29% 100%
1987 69% 31% 100%
1988 72% 28% 100%
1989 70% 30% 100%
1990 69% 31% 100%
1991 68% 32% 100%
1992 67% 33% 100%
1993 63% 37% 100%
1994 66% 34% 100%
1995 65% 35% 100%
1996 67% 33% 100%
1997 69% 31% 100%
1998 69% 31% 100%
1999 70% 30% 100%
2000 69% 31% 100%
2001 70% 30% 100%
2002 69% 31% 100%
2003 68% 32% 100%
2004 66% 34% 100%
2005 66% 34% 100%
2006 70% 30% 100%
2007 70% 30% 100%
2008 66% 34% 100%
2009 66% 34% 100%
2010 70% 30% 100%
2011 72% 28% 100%
2012 70% 30% 100%
2013 71% 29% 100%
2014 73% 27% 100%
2015 77% 23% 100%
2016 78% 22% 100%
2017 79% 21% 100%
2018 77% 23% 100%
2019 77% 23% 100%
0%
20%
40%
60%
80%
100%
120%
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Annual %
Outside Industry 100%
Restructuring activities take place at the industry level only because the companies often take
corporate action to build strategies to restructure the operational activities and other related
things. For restructuring purposes, the related companies often get concentrated or clustered
in one region to smoothen up the productive activities.
No, all the investments are not irreversible.
Generally, irreversibility means being unable to reverse something. But, from the perspective
of investment irreversibility occurs when the investors can’t recover his/her invested capital
due to some unexpected occurrence and the investment becomes sunk cost. Investment
expenditures are sunk costs when they are firm or industry specific
Restructuring