Let’s Take this Private: Linens’n Things versus Bed Bath & Beyond 1. Assume that you are Robert DiNicola, CEO of Linen’n things, what specific competitive strategy and implementation plan would you take to turn around LNT？ * improve supply chain, lower their cost * Improve online store, online shopping * Differentiation strategy * Globalization. They can seek international partner to expand their business * Learning the successful experiences from Bed Bath & Beyond

2. Will DiNicola’s effort to turn around LNT be aided or hindered by changing economic and industry conditions (show your macro environment and industry analysis？
Be aided * Industry consolidation. Business environment becomes less favorable. It’s good for LNT to turn around based on the big scope and the existed structure. * Integrate internet. It’s good for LNT to build the online store * Globalization of the fashion. It’s good for LNT because of their differentiated products.
Be hindered: * Slow increasing rate with intensely competition. The maturity of the U.S. market. * Industry consolidation makes the large companies stronger, but LNT fall behind some big companies like BBBY. So it’s hard to catch up. * Financial crisis. * Government policies affect the industry performance. e.g. interest rate adjustment. High interest rate, low purchase. 3. How had Bed Bath & Beyond come to surpass Linens’n Thins over time despite its similar initial founding in the early 1970s (in terms of strategy and execution)? * BBBY expanded inventory, no debt and promoted only from within the company, while relying on store managers for inventory control. However, LNT just focus on increase market share. They didn’t care about the efficiency. * BBBY’s merchandising innovation was better than LNT’s. and more flexibility than LNT.

4. As a private equity, why did Apollo group acquire LNT? Is a private equity firm more likely to turn around LNT than a publicly traded firm (the pros and cons of public vs. private ownership)? Why did this acquisition fail? * The main reason is the low price for purchasing. It sold at $1.3 billion compared to BBBY $10.7 billion. * Apollo group believed that they can fix LNT’s problem and then run it or resell it to make profit. * A private equity firm is not more likely to turn around LNT than publicly traded firm. Because in order to fix LNT’s problem, the firm needs enough money. However, the private ownership doesn’t own enough money to fix it. (Private ownership firm has more freedom to make changes than a public firm, however, their budget is limited.) * Apollo group made a wrong decision. They though they can fix LNT’s problem, however, they didn’t. Also, the housewares industry environment is mature and real estate was going down after Apollo group purchased LNT. LNT was hard to keep its market share.