Bed Bath and Beyond - Essay Example

Porter’s better off test revels that competition at the level of business units defines the ability of a company to achieve a competitive advantage within the larger business environment. This section gives a critical analysis of BB&B’s corporate strategies with a view of evaluation the effectiveness of these strategies in enabling the company to have a competitive advantage within the retail business markets. Diversification through Acquisition Porter’s better off strategy demonstrates that it is through acquisitions that companies have been able to expand their business as a corporate strategy of increasing their competitiveness (Porter 4).

BB&B acquired Cost Plus as one of its corporate strategies of diversifying business activities. The acquisition of Cost Plus cost BB&B $ 495 million but this strategy in the long run is proving effective in enhancing the company’s competitiveness (DeTar 1). Cost Plus has given BB&B a higher market position in home furnishings (DeTar 1). Diversification through acquisition is a concept within portfolio management which has allowed many companies to diversify their portfolios. Diversification of portfolios which is achieved through acquisition allows a company to prevent the risks which are associated with business processes (Misonzhnik 1).

Porter in his better off test asserts that acquisition corporate strategy becomes effective is the acquired units are autonomous (Porter 10). In light of this argument, it is illustrated that the acquisition that BB&B made on Cost Plus maintained the autonomy of the business units within the acquired company. The need for autonomy within the acquired units was decided upon by the management of the company so that the costs which are associated with change are avoided. Porter further revels that the autonomy among acquired units must be aimed at ensuring that the employees within the new units are compensated and rewarded in accordance to the performance the units (Porter 10).

The Cost Plus units as acquired by BB&B comprised of employees who were motivated for increased performance through performance based rewards and compensation scheme. This is shown by the fact that “the company plans to hire 35 full- and part-time workers” (Carnopis 1). In return the company has achieved increased performance in the market which justifies its competitiveness within the home merchandise retail business and market. Shared Activities within Value Chains The CEO of Cost Plus pointed out that "Our successful merchandising and product collaborations over the last two years have demonstrated that our organizations work well together” (DeTar 1).

The CEO was referring to the collaboration between the company and Bed Bath & Beyond. Porter’s better off test further postulates that when the value chains of activities of a company’s units are shared as a corporate strategy, competitiveness in the business environment is guaranteed. It is therefore through the collaboration between the acquired units and the existing ones that Bed Bath and Beyond is able to achieve increased success and competitiveness within the market. Transfer of Skills The values chains and business units of Bed Bath & Beyond and the acquired Cost Plus have more experienced, talented, creative and skilled expertise.

As a result, the company has utilized the abilities of the employees through transfer skills corporate strategy