RONA Inc.: Was Being Bought Out the Best Option?
(7 pages of text)
Case (Pub Mat)
RONA Inc. (RONA), a Canadian giant in home improvement retail, received an unsolicited offer of CA$1.76 billion from Lowe’s Companies, Inc., (Lowe’s) in 2012. Lowe’s, a U.S. company, was already operating in the Canadian market through a subsidiary, and its goal in acquiring RONA was to rapidly upscale its operations. RONA’s board of directors declined the offer. Lowe’s came back in February 2016 with a second offer worth $3.2 billion. Negotiations followed, the deal was completed in March 2016, and RONA officially became part of Lowe’s Canada in May 2016. One year later, the debate re-ignited. In October 2017, Lowe’s Canada’s president stated that he hoped to demonstrate within five years that this was the best option for RONA. Was it?
This case was written for a course on marketing strategy at the undergraduate level. It can be used in classes that cover segmentation, market positioning, or sustainable competitive advantage. It can also be used in a business marketing course when discussing diversification strategy. Finally, the case is suitable for a retail management course that covers retail segmentation, retail banner management, consumer value proposition, or retail growth strategy. The case gives students the opportunity to do the following:
- Apply the concept of retail market segmentation in the home improvement market.
- Conduct a competitive analysis and identify threats and trends in the home improvement market.
- Evaluate the impact of changes to a retailer’s business model on the value proposition to consumers.
- Examine the validity of stakeholders’ opinions on the acquisition of RONA by Lowe’s.
- Discuss the relevance of another possible future for RONA.
Canada; Canada, Large, 2016
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