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, wage bills are increasing, increasing commodity prices, supply chains are disrupted by pandemic , increasing household debt because of falling income levels, geopolitical disruptions, digital marketing is dominated by two big players Facebook and Google,
challanges to central banks by blockchain based private currencies, increasing inequality as vast percentage of new income is going to the top 1%, 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 -
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
Successful track record of launching new products
– Loblaw Superstores has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Loblaw Superstores has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
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 -
Lack of clear differentiation of Loblaw Superstores products
– To increase the profitability and margins on the products, Loblaw Superstores needs to provide more differentiated products than what it is currently offering in the marketplace.
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.
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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Loblaw Companies Limited: Preparing for Wal-Mart Supercenters, in the dynamic environment Loblaw Superstores has struggled to respond to the nimble upstart competition. Loblaw Superstores has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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.
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.
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.
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.
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.
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.
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 -
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.
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.
Learning at scale
– Online learning technologies has now opened space for Loblaw Superstores to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
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.
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.
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.
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.
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.
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.
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.
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.
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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Loblaw Superstores is facing challenges because of the dominance of functional experts in the organization. Loblaw Companies Limited: Preparing for Wal-Mart Supercenters case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
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 -
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.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
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.
Consumer confidence and its impact on Loblaw Superstores demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
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.
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.
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.
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.
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.
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.
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.
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.
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 .
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.