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Case Analysis Of Office Max's Meger


            
             In September 1996 Staples and Office Depot announced merger plans that would have the number 1 and 2 company in the industry merge together. This would move OfficeMax from number 3 to 2, but increase competition. The merger has not taken place, but it opened OfficeMax eyes on competing within the industry. OfficeMax used strategic management to stay competitive within the industry. .
             OfficeMax was founded in Cleveland, Ohio in 1988 and was initially financed by individuals and private venture capitalists. The company originally targeted small businesses. By 1990, 90% was purchased by Kmart. Kmart was a large financial backer and let the business implement it's own strategy. Sales grew at a rate 141% from 1990 through 1993. During this time they purchased 96 BizMart superstores. In 1994 they had 345 stores and over $1.4 billion dollars in Sales. The company did not see a profit until 1994. Also in 1994, Kmart decided to focus back on its core discount store operations and sold of OfficeMax. With the money from the sale Kmart worked out a deal, which helped finance OfficeMax's expansion. .
             In January 1996 OfficeMax reached $2.54 billion in sales and $125 million in net income. To continue with their aggressive growth OfficeMax worked on a national advertisement plan, increased efficiency within stores, increased inventory turnover, and improved productivity. With increasing efficiency they purchased computers and software. All levels of management were entitled to huge data bases. This allowed for fewer people to do more operations more efficiently. The new system made them have the lowest administrative costs in the industry. They also developed their own logistics system to lower inventory costs. They established 5 Thru Max cross-docking facilities that took large shipments from suppliers and broke them down into specific orders from stores. To create their current culture top executives met on Saturday Mornings and discussed what they did that week.


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