3. Star Alignment Model
Strategy
• Convenient
• Both retail & online presence
• Enhance simplicity
Structure
• Two way communication
• Joint decision making
Culture
Team oriented
Family atmosphere
Rewards
• Stock-based compensation (executives)
• Group-based compensation (employees)
Overview
Current
Situation
Risks
Structure
• Flat structure
Human Resource Management
• External HR for hiring during merger
• Hire internally first
Operations
Structure
Branding
Integration
Details
4. Agenda
◦ Current Situation
◦ Office Depot
◦ Office Max
◦ Risks
◦ External
◦ Internal
◦
◦
◦
◦
Operations
Organizational Structure
Branding
Integration Details
◦ Profitability and Growth
◦ Potential Issues with Merger Integration
◦ How to Mitigate Merger Integration Issues
Overview
Current
Situation
Risks
Operations
Structure
Branding
Integration
Details
5. Office Depot Current
Situation
◦
◦
◦
◦
◦
Negative profit
International sales sliding
Operating costs increasing
Minimal flexibility in financing gap
Lacking innovation
Overview
Current
Situation
Risks
Operations
Structure
Branding
Integration
Details
6. Office Max Current
Situation
◦
◦
◦
◦
Decline in sales – in both retail and contract segments
Low margins
Increasing delivery expenses
Increasing incentive compensation
Overview
Current
Situation
Risks
Operations
Structure
Branding
Integration
Details
7. External Risks of Both
Companies
◦
◦
◦
◦
◦
◦
◦
Reliance on commodities
Seasonality
Foreign currency fluctuations
Competition
Extremely cyclical
Supply>Demand
Technology
Overview
Current
Situation
Risks
Operations
Structure
Branding
Integration
Details
8. Internal Risks of Both
Companies
Office Depot
◦ Loss of Government contracts
Office Max
◦ Loss of Health Care contracts
Both
◦ Loss of key talent
Overview
Current
Situation
Risks
Operations
Structure
Branding
Integration
Details
10. Current Actions We
Support
◦ Combining the suppliers (North America) enable us greater
flexibility with AP and better prices
◦ Harmonization of products
◦ Combine
◦
◦
◦
◦
◦
Distribution and delivery networks (North America)
Sales networks
Advertising
E-commerce programs
Combine/Close Stores create less brick and mortar costs
◦ Eliminate redundancies in support and sales functions
◦ Standardize processes lowers technological costs
Overview
Current
Situation
Risks
Operations
Structure
Branding
Integration
Details
11. Additional Actions We
Suggest
◦
◦
◦
◦
Reduce SKUs to consolidate product line
Create online advertising strategy
Close down underperforming global stores
Focus on establishing more long-term government and healthcare
contracts to ensure sales
◦ Integrate Office Depot and Office Max loyalty programs
Overview
Current
Situation
Risks
Operations
Structure
Branding
Integration
Details
13. Executive Team
Roland C. Smith
President North
America - John
Kenning
Overview
Steve Schmit –
President
International
Current
Situation
Executive CFO and
Vice Pres – Steve
Hare
Risks
CPO – Michael
Allison
Operations
Structure
CLO (legal) – Elisa
Garcia
Branding
Strategy and
Innovation Officer –
James Barr
Integration
Details
14. President of North America
◦ John Kenning
◦ Diverse background in leading regional divisional
◦ Mr. Kenning has more than 25 years of experience leading a variety
of types of teams at large enterprise companies
◦ Championed Nortel during transitional period
◦ OMX Legacy – balances against multiples ODPs on executive for
MOE culture
Overview
Current
Situation
Risks
Operations
Structure
Branding
Integration
Details
15. Strategy and Innovation
Officer
◦ James Barr
◦ Diverse work experience at different types of companies
◦ Successful in developing profitable e-commerce strategies
◦ OMX Legacy – balances against multiple ODPs on executive for
MOE culture
Overview
Current
Situation
Risks
Operations
Structure
Branding
Integration
Details
16. Leadership Team
Leadership
Team
Executive Vice
President of Retail
– Juan Guerrero
Contract
Sales – Steve
Calkins
Overview
Ecommerce
– Mike
Kirschner
Current
Situation
Merchandising
– Ron Lalla
Risks
Marketing –
Tim Rea
Operations
Supply Chain
– Larry
Hartley
Structure
Real Estate –
Rob Koch
Branding
Global Chief
Information
Officer – Todd
Hale
Integration
Details
Integration –
Deb
O’Connor
17. Branding
• Revitalize company
• Customers: Not just a one-time purchase
• Sense of unity for employees/executives
Overview
Current
Situation
Risks
Operations
Structure
Branding
Integration
Details
21. Are the Projections
Realistic?
• Synergies Projections:
•
•
•
•
•
•
•
•
•
Assuming synergies occurring internationally
Realistic time frame
Huge overlap in contract and retail business’ in North America
Same customer base, distribution channels and supplier types
Similar product, support and sales functions
CEO used closing stores and combining stores in past to reduce costs
Both increasing focus on e-commerce platform
Both use media, catalogue and insert advertising
Ability to eliminate redundancies, standardize processes and harmonize
products
Overview
Current
Situation
Risks
Operations
Structure
Branding
Integration
Details
22. Are the Projections
Realistic?
• Sales Projections:
• Weakened demand for office supplies and technology sales in commercial
segment and projected to keep declining
• Both not doing well internationally
• Trouble with execution and economic environment abroad
• Staples might take advantage of disruption occurring while merging
companies and steal more market share
• High possibility of losing more competition to Amazon and technological
substitutions
• Sales projections likely overstated
Overview
Current
Situation
Risks
Operations
Structure
Branding
Integration
Details
23. Potential Issues with
Merger Integration
◦
◦
◦
◦
◦
◦
◦
◦
Behaves like two separate entities
No clear understanding of integration plan
Job losses
Potential backlash from Union
Uneven dividend payment
Market share threat
Over-reliance on few suppliers
Risk of unsuccessful online platform
Overview
Current
Situation
Risks
Operations
Structure
Branding
Integration
Details
24. How to Mitigate Merger
Integration Issues
◦ Competitive Edge
◦ Compete with online platforms Use Loyalty Program Integration
◦
◦
◦
◦
◦
◦
◦
◦
Behaves like two separate entities
No clear understanding of integration plan
Job losses
Potential backlash from union
Uneven dividend payment
Market share threat
Over-reliance on few suppliers
Risk of unsuccessful online platform
Overview
Current
Situation
Risks
Operations
Structure
Branding
Integration
Details
