Case Summary: West Marine

Case Summary: West Marine

Qingyun Zeng

Background:

West Marine is an American company based in Watsonville, California which operates a chain of boating supply and fishing retail stores. In the spring of 1996, West Marine acquired one of its competitors: E&B Marine. And the consequences were: peak season out-of-stock levels climbed to more than 12 percent and, correspondingly, sales dropped by almost 8 percent as compared to the previous year. The analysis showed that the infrastructure of West Marine was not strong enough to support an organization that almost doubled its size. By the end of 1998, Edmondson became the new CEO of West Marine. To put the company back on an even footing, he focused on the following four areas: (1) Leadership, (2) Strategy, (3) People and Culture, and (4) Systems and Processes. In addition, West Marine improved its supply chain collaboration by using the CPFR program and regained an even keel. In 2003, West Marine faced similar questions when acquired BoatU.S.

Analysis:

From the West Marine acquisition of E&B Marine, we can see that the pitfalls of executing an acquisition are infrastructure is not strong enough to support development, more catalogs and employees to management, supply chain gets more complex and core competitiveness of enterprises faces re-selection.

The four aspects Edmondson focused on could solve these questions precisely.

1. Leadership: Key players were changed by veterans from the industry. And more experienced people who have managed large and complex retail organization before were recruited. By doing this, West Marine could have the ability to manage more catalogs and complex supply chain.

2. Strategy: Each executive was given the general mandate to turn around his respective function. The strategy outlined a series of specific financial goals (company-wide performance indicators), that included ROE, cash flow, comp sales, EPS, product service levels, market share,...