Horizontal Acquisition   Read the overview below and complete the activities that follow.   Horizontal mergers and acquisitions, which involve combining the operations of firms within the same product or service market, provide an effective means for firms to rapidly increase the scale and horizontal scope of their core business.   The goal of this exercise is for you to understand the strategic benefits and risks of expanding a company’s horizontal scope of operations. Before completing this exercise, be sure to review Illustration Capsule 6.3, “Walmart’s Expansion into E-Commerce via Horizontal Acquisition.” ILLUSTRATION CAPSULE 6.3 Walmart’s Expansion into E-Commerce via Horizontal Acquisition As the boundaries between traditional retailing and online retailing have begun to blur, Walmart has responded by expanding its presence in e-commerce via horizontal acquisition. In 2016, Walmart acquired Jet.com, an innovative U.S. e-commerce start-up that was designed to compete with Amazon. Jet sells everything from household goods and electronics to beauty products, apparel, and toys from more than 2,400 retailer and brand partners. Jet.com rewards customers for ordering multiple items, using a debit card instead of a credit card, or choosing a no-returns option; it passes its cost savings on to customers in the form of lower prices. The low-price approach of Jet.com fit well with Walmart’s low-price strategy. In addition, Walmart hoped that the acquisition would help it to accelerate its growth in e-commerce, provide quick access to some valuable e-commerce knowledge and capabilities, increase its breadth of online product offerings, and attract new customer segments. Walmart, like other brick and mortar retailers, was facing a myriad of issues caused by changing customer expectations. Consumers increasingly valued large assortments of products, a convenient shopping experience, and low prices. Price sensitivity was increasing due to the ease of comparing prices online. As a traditional retailer, Walmart was facing stiff competition from Amazon, the world’s largest and fastest growing e-commerce company. Amazon’s seemingly endless inventory of goods, excellent customer service, expertise in search engine marketing, and appeal to a wide consumer demographic added pressure on the overall global retail industry. The acquisition of Jet built on the foundation already in place for Walmart to respond to the external pressure and continue growing as an omni-channel retailer (i.e., bricks and mortar, online, or mobile). After investing heavily in their own online channel, Walmart.com, the company was looking for other ways to attract customers by lowering prices, broadening their product assortment, and offering the simplest, most convenient shopping experience. Jet’s breadth of products, access to millennial and higher-income customer segments, and best in-class pricing algorithm would accelerate Walmart’s progress across all of these priorities. Since the acquisition, Jet has continued to expand its own offerings with private-label groceries, further increasing competition with Amazon’s AmazonFresh grocery business. More recently, Walmart made several other acquisitions of online apparel companies, thereby strengthening Jet’s apparel offerings and further expanding Walmart’s presence in e-commerce. These include ShoeBuy (a competitor of Amazon-owned Zappos), Bonobos in menswear, Moosejaw in outdoor gear and apparel, and Modcloth in vintage and indie womenswear. While Walmart’s e-commerce sales still pale in comparison to Amazon, this represents a promising start for Walmart, as the retail industry continues to transform. Walmart’s horizontal acquisition strategy of Jet.com Multiple Choice A) offered superior alternatives to forming alliances or partnerships with existing rivals. B) was an effective way to pursue a blue-ocean strategy and an outsourcing strategy. C) was not successful because of the financial drain of using Walmart’s cash resources to accomplish the acquisition. D) offered considerable cost-saving opportunities and was beneficial in helping the company expand into a new industry. E) offered the best way to differentiate its product offering and used a differentiation strategy to strength its market position.