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 - – technology disruption, supply chains are disrupted by pandemic , there is increasing trade war between United States & China, customer relationship management is fast transforming because of increasing concerns over data privacy, there is backlash against globalization, cloud computing is disrupting traditional business models, geopolitical disruptions,
increasing government debt because of Covid-19 spendings, digital marketing is dominated by two big players Facebook and Google, 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 -
Ability to recruit top talent
– Loblaw Superstores is one of the leading recruiters in the industry. Managers in the Loblaw Companies Limited: Preparing for Wal-Mart Supercenters are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
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.
Highly skilled collaborators
– Loblaw Superstores has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Loblaw Companies Limited: Preparing for Wal-Mart Supercenters HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
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.
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.
Operational resilience
– The operational resilience strategy in the Loblaw Companies Limited: Preparing for Wal-Mart Supercenters Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
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.
Low bargaining power of suppliers
– Suppliers of Loblaw Superstores in the sector have low bargaining power. Loblaw Companies Limited: Preparing for Wal-Mart Supercenters has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Loblaw Superstores to manage not only supply disruptions but also source products at highly competitive prices.
Superior customer experience
– The customer experience strategy of Loblaw Superstores in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
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.
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.
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.
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 -
High cash cycle compare to competitors
Loblaw Superstores has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Slow decision making process
– As mentioned earlier in the report, Loblaw Superstores has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Loblaw Superstores even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
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.
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.
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 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Loblaw Companies Limited: Preparing for Wal-Mart Supercenters, it seems that the employees of Loblaw Superstores don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Loblaw Superstores supply chain. Even after few cautionary changes mentioned in the HBR case study - Loblaw Companies Limited: Preparing for Wal-Mart Supercenters, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Loblaw Superstores vulnerable to further global disruptions in South East Asia.
High bargaining power of channel partners
– Because of the regulatory requirements, Kenneth G. Hardy, Veronika Papyrina suggests that, Loblaw Superstores is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Need for greater diversity
– Loblaw Superstores has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
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.
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 -
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.
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.
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.
Using analytics as competitive advantage
– Loblaw Superstores has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Loblaw Companies Limited: Preparing for Wal-Mart Supercenters - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Loblaw Superstores to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Loblaw Superstores in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
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.
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.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Loblaw Superstores can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
Building a culture of innovation
– managers at Loblaw Superstores can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Loblaw Superstores to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Loblaw Superstores to hire the very best people irrespective of their geographical location.
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 -
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.
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.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Loblaw Superstores can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
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.
Stagnating economy with rate increase
– Loblaw Superstores can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Loblaw Superstores in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
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.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Loblaw Companies Limited: Preparing for Wal-Mart Supercenters, Loblaw Superstores may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
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.
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.
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.