Ascena Strategy of Acquisition - Research Paper

Introduction

The main challenge that companies face in their industry is the capability to survive and be able to take a route that will ensure value creation. This means that an organization has to tackle the market strategically with goals and actions that are aligned into offering positive results. Every aspect of the business should be known so that management can understand how to deal with different business situations. In a business, each person involved must be satisfied in the end, and so value creation is more effective when both the customer and stakeholders benefit while the business survives. Ascena Retail Group is a company that operates in the specialty retail industry and seems to have a struggling year in 2017. This paper is a case study of Ascena Retail Group, and it looks at how the company undertook value-enhancing diversification path, how the company has handled its acquisitions and examines Ascena's corporate strategy before offering recommendations on where the firm can improve.

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Companies usually choose different ways in which they can achieve value enhancement and diversification within their environments. Ascena is a nation-wide company that has been in the specialty retail industry for more than five decades, which makes its approach to value creation more diverse. However, the industry has changed profoundly, and the year 2017 is a wakeup call for Ascena to look at how innovative they can be with their value enhancement strategies (Assenza & Eisner, 2017). No matter how big a company may seem today, the future is not guaranteed if appropriate measures are not put into place to ensure stability in the market. Ascena as a company has pursed value-creating diversification path through its constant switch of products that they offer to their customers. The company began as a retail store for women office wear but quickly adapted with the switch of women taste to casual wear and so started offering more sportswear while expanding on jewelry and shoes. The 2005 acquisition of American Maurices and utilization of its stylists to provide women of age 17-34 with fitting options at reasonable prices is another way that the company diversified its value creation path. In these ways, the company is able always to maintain customer satisfaction since they are switching with the demands of the market that they deal with. The value-enhancing diversification path used ensured that the company created immediate value for its customers, the potential value for the company's image, and applied value through acquisitions.

Survival is not all about benefiting more from the environment that one exists in but rather knowing how to utilize the environment well to create a better future. Ascena approach towards diversification has not only been about the creation of value for the company, but some have also focused on different aspects that can foster survival in the industry. Ascena Retail Group was originally known as Dress Barn Inc. but changed the name in 2011 and also went on to change its stock symbol. The main objective of this move was not to create value but rather diversify and offers a new appearance in the market. The 2014 mega-acquisition of ANN Inc. also applies as another move by Ascena Retail Group to diversify for a non-value enhancing reason. ANN Inc. was on its downfall and the main reason as to why Ascena acquired it was to gain the power of being the largest specialty retailer in the market. Due to the lack of a value creation motive, this acquisition did not go as the company had expected.

A company's capabilities of survival in an industry are primarily determined by the ability of the organization to expand and conquer the market. To become the largest organization in the specialty retail industry, Ascena had to grow and expand through the decades. This expansion and market growth is based on how the company was able to acquire other companies in the industry and utilized their values effectively for expansion. Before the ANN Inc. acquisition failure, Ascena was the best example of how a company can grow by purchasing other companies that may seem useful for their objectives. The acquisition of American Maurices Company ran smoothly, and the retail group benefited from this move. In 2009 Ascena also successfully purchased Justice Company which was specialized in 7 to 14-year-old girls clothing. Acquisition for Ascena has been for expansion and growth as their latest purchase of ANN Inc. propelled them into being the leaders in the industry.

Acquisition alone is not enough for a company to expand and grow, but how a company utilizes such purchases will determine the success. Ascena used the experience in American Maurices to offer customer satisfaction and also increase its market. The availability of stylists to offer fitting and affordable clothing for an extended age bracket worked well for Ascena as the acquisition of Maurices became successful. The company also used the acquisition of Justice to extend its market age bracket as the company switched attention to younger girls of age 7-14. This age bracket had not been covered before, and so the company used it to expand its market. As everything has its negativity, the acquisition also comes with its downfalls. The acquisition of ANN did not go as Ascena would have expected as the approach failed to yield the necessary rewards. ANN acquisition did not go just stagnant the company's growth in the industry but is also leading the organization into debts.

Ascena's cooperate strategy is mainly based on growth through the acquisition of other companies and the utilization of their capabilities. This a move that is only effective when there are beneficial advantages in the company being acquired and having the appropriate idea of how to utilize them. Ascena adaptability to change has been essential for its growth as it has enhanced the company's ability to increase the market while still improving on customer satisfaction. Even though its acquisition strategy has been working in the past, the ANN situation showcases some level of poor decision making when it comes to expansion. The approach, in the end, looked like a rash decision that required a lot of time before actualization.

Ascena strategy of acquisition is not wrong, but the company should examine previous records of the company's they would like to purchase. This will ensure that challenges that are to be expected are noted early and the company will also understand how to benefit from the advantages available. Ascena's approaches should be directed towards achieving improvement of value within the organization so that profitability is maximized. The company's moves should switch from profit-oriented to value-oriented so as to keep every individual involved in the company's operation satisfied.

References

Assenza, P., & Eisner, A. B. (2017). Ascena: Odds of Survival in Specialty Retail. Strategic Management: Text and Cases, Ninth Edition, 25-34.