Case Study Description of Loblaw Companies Limited: Preparing for Wal-Mart Supercenters
In February 2007, Loblaw Companies Limited (Loblaw) was far and away the dominant food retailer in Canada with a market share of 35 per cent across its various retailing formats. As part of its long term retailing strategy and in a bid to reduce the impact of Wal-Mart Canada's entry into food retailing, in 2004 Loblaw began to build new The Real Canadian Superstores in Ontario and position them as "blockers" that resembled Wal-Mart's U.S. combination food and general merchandise superstores. It overhauled its entire logistical system to improve its cost structure and it brought in new senior executives in 2006. Unfortunately, The Real Canadian Superstores appeared to be disappointing some customers, retail analysts, industry experts and even former Loblaw executives. Meanwhile, Wal-Mart entered the retail food market in 2006 with distinctive emphasis on fresh produce and deli offerings on top of its low prices and wide assortment. The question for Loblaw's executive team was whether or not to make any strategic changes, and, if so, in what direction.
Swot Analysis of "Loblaw Companies Limited: Preparing for Wal-Mart Supercenters" written by Kenneth G. Hardy, Veronika Papyrina includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Loblaw Superstores facing as an external strategic factors. Some of the topics covered in Loblaw Companies Limited: Preparing for Wal-Mart Supercenters case study are - Strategic Management Strategies, Marketing, Strategic planning and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Loblaw Companies Limited: Preparing for Wal-Mart Supercenters casestudy better are - – increasing commodity prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions, cloud computing is disrupting traditional business models, increasing transportation and logistics costs, challanges to central banks by blockchain based private currencies, wage bills are increasing,
talent flight as more people leaving formal jobs, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of Loblaw Companies Limited: Preparing for Wal-Mart Supercenters
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Loblaw Companies Limited: Preparing for Wal-Mart Supercenters case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Loblaw Superstores, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Loblaw Superstores operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Loblaw Companies Limited: Preparing for Wal-Mart Supercenters can be done for the following purposes –
1. Strategic planning using facts provided in Loblaw Companies Limited: Preparing for Wal-Mart Supercenters case study
2. Improving business portfolio management of Loblaw Superstores
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Loblaw Superstores
Strengths Loblaw Companies Limited: Preparing for Wal-Mart Supercenters | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Loblaw Superstores in Loblaw Companies Limited: Preparing for Wal-Mart Supercenters Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Loblaw Superstores are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Innovation driven organization
– Loblaw Superstores is one of the most innovative firm in sector. Manager in Loblaw Companies Limited: Preparing for Wal-Mart Supercenters Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Training and development
– Loblaw Superstores has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Loblaw Companies Limited: Preparing for Wal-Mart Supercenters Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Organizational Resilience of Loblaw Superstores
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Loblaw Superstores does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Diverse revenue streams
– Loblaw Superstores is present in almost all the verticals within the industry. This has provided firm in Loblaw Companies Limited: Preparing for Wal-Mart Supercenters case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Analytics focus
– Loblaw Superstores is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Kenneth G. Hardy, Veronika Papyrina can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Strong track record of project management
– Loblaw Superstores is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to lead change in Strategy & Execution field
– Loblaw Superstores is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Loblaw Superstores in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High switching costs
– The high switching costs that Loblaw Superstores has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Sustainable margins compare to other players in Strategy & Execution industry
– Loblaw Companies Limited: Preparing for Wal-Mart Supercenters firm has clearly differentiated products in the market place. This has enabled Loblaw Superstores to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Loblaw Superstores to invest into research and development (R&D) and innovation.
Learning organization
- Loblaw Superstores is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Loblaw Superstores is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Loblaw Companies Limited: Preparing for Wal-Mart Supercenters Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Loblaw Superstores digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Loblaw Superstores has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Weaknesses Loblaw Companies Limited: Preparing for Wal-Mart Supercenters | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Loblaw Companies Limited: Preparing for Wal-Mart Supercenters are -
Skills based hiring
– The stress on hiring functional specialists at Loblaw Superstores has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Slow to strategic competitive environment developments
– As Loblaw Companies Limited: Preparing for Wal-Mart Supercenters HBR case study mentions - Loblaw Superstores takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Loblaw Companies Limited: Preparing for Wal-Mart Supercenters HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Loblaw Superstores has relatively successful track record of launching new products.
Interest costs
– Compare to the competition, Loblaw Superstores has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Products dominated business model
– Even though Loblaw Superstores has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Loblaw Companies Limited: Preparing for Wal-Mart Supercenters should strive to include more intangible value offerings along with its core products and services.
Low market penetration in new markets
– Outside its home market of Loblaw Superstores, firm in the HBR case study Loblaw Companies Limited: Preparing for Wal-Mart Supercenters needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
No frontier risks strategy
– After analyzing the HBR case study Loblaw Companies Limited: Preparing for Wal-Mart Supercenters, it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
High operating costs
– Compare to the competitors, firm in the HBR case study Loblaw Companies Limited: Preparing for Wal-Mart Supercenters has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Loblaw Superstores 's lucrative customers.
Aligning sales with marketing
– It come across in the case study Loblaw Companies Limited: Preparing for Wal-Mart Supercenters that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Loblaw Companies Limited: Preparing for Wal-Mart Supercenters can leverage the sales team experience to cultivate customer relationships as Loblaw Superstores is planning to shift buying processes online.
Increasing silos among functional specialists
– The organizational structure of Loblaw Superstores is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Loblaw Superstores needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Loblaw Superstores to focus more on services rather than just following the product oriented approach.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Loblaw Superstores is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Loblaw Companies Limited: Preparing for Wal-Mart Supercenters can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Opportunities Loblaw Companies Limited: Preparing for Wal-Mart Supercenters | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Loblaw Companies Limited: Preparing for Wal-Mart Supercenters are -
Developing new processes and practices
– Loblaw Superstores can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Loblaw Superstores can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Loblaw Superstores can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Loblaw Superstores can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Loblaw Superstores in the consumer business. Now Loblaw Superstores can target international markets with far fewer capital restrictions requirements than the existing system.
Manufacturing automation
– Loblaw Superstores can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Low interest rates
– Even though inflation is raising its head in most developed economies, Loblaw Superstores can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Creating value in data economy
– The success of analytics program of Loblaw Superstores has opened avenues for new revenue streams for the organization in the industry. This can help Loblaw Superstores to build a more holistic ecosystem as suggested in the Loblaw Companies Limited: Preparing for Wal-Mart Supercenters case study. Loblaw Superstores can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Loblaw Superstores can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Better consumer reach
– The expansion of the 5G network will help Loblaw Superstores to increase its market reach. Loblaw Superstores will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Buying journey improvements
– Loblaw Superstores can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Loblaw Companies Limited: Preparing for Wal-Mart Supercenters suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Loblaw Superstores to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Leveraging digital technologies
– Loblaw Superstores can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Loblaw Superstores can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Loblaw Companies Limited: Preparing for Wal-Mart Supercenters, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats Loblaw Companies Limited: Preparing for Wal-Mart Supercenters External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Loblaw Companies Limited: Preparing for Wal-Mart Supercenters are -
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Loblaw Superstores will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
High dependence on third party suppliers
– Loblaw Superstores high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Loblaw Superstores.
Shortening product life cycle
– it is one of the major threat that Loblaw Superstores is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Loblaw Superstores can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Loblaw Companies Limited: Preparing for Wal-Mart Supercenters .
Technology acceleration in Forth Industrial Revolution
– Loblaw Superstores has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Loblaw Superstores needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Loblaw Superstores business can come under increasing regulations regarding data privacy, data security, etc.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Loblaw Superstores in the Strategy & Execution sector and impact the bottomline of the organization.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Loblaw Superstores needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Loblaw Superstores with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Environmental challenges
– Loblaw Superstores needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Loblaw Superstores can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Regulatory challenges
– Loblaw Superstores needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Strategy & Execution industry regulations.
Increasing wage structure of Loblaw Superstores
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Loblaw Superstores.
Weighted SWOT Analysis of Loblaw Companies Limited: Preparing for Wal-Mart Supercenters Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Loblaw Companies Limited: Preparing for Wal-Mart Supercenters needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Loblaw Companies Limited: Preparing for Wal-Mart Supercenters is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Loblaw Companies Limited: Preparing for Wal-Mart Supercenters is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Loblaw Companies Limited: Preparing for Wal-Mart Supercenters is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Loblaw Superstores needs to make to build a sustainable competitive advantage.
