Reserch On M&A Motivation And Performance Of Gome

For home appliance chain industry,"Scale means profit" seems to be a truth. The M&A activities were surging in home appliance chain industry during2005and2008. Gome is a representive enterprise which gets a massive expansion by M&A, achieveing a number of stores from more than200to more than1,700and maintaining a leading position in the industry. M&A can make rapid expansion. However, that scale is too large or developing too fast will lead the enterprise into the bottlenecks which management capabilities is difficult to keep up with the development of the scale. Does Gome have such problems? What is the motivation of Gome M&A, wether dominated by scale? What is the effect after the mergering activities? Whether the scale and profit develop simultanely? By analyzing the motives, effect and the scale development problem of Gome mergers and acquisitions can provide a reference to the home appliance retail chain development in the future, including expansion rate, expansion mode and etc.By analyzing the situation and the competitive structure of home appliance retail chain industry, Gome profit model, M&A activities, developing history, business strategy and business operation model can make a foundation for the analyse of Gome M&A motivation. The paper proposes the effection based on the motivations. By building effect alalyzing index system, the paper makes a comprehensive reaserch of the effect of the acquisitions. Based on the effect research, the paper makes a deep analysis of the scale development problem of Gome.Through the research and analysis in this paper, the main motivation of Gome M&A activities was to make a rapid scale expansion. Gome M&A activities made a rapid expansion of the sales network, enhanced market power, improved financial capability and accessed to strategic resources, but Gome did not harvest obvious economies of scale. The operating performance indicators had varied deteriorately, mainly due to the management capacity and scale enterprises do not match. Expecially the ability of procurement management, logistics management, human resources management could not keep up with the scale development. In addition, after Gome made an acquisition of a number enterprises, the management levels increased, which made management difficult to standardize and weaken the advantages of chain operations, resulted in lower management efficiency. Through the analysis of Suning operate performance, we find Suning had such problem when its scale developed too fast. Home appliance retail chain enterprises should coordinate the relationship between scale and management capabilities, which can make enterprise into stable, healthy and sustainable development.