Loblaw Companies Limited - Acquiring Shoppers Drug Mart SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of Loblaw Companies Limited - Acquiring Shoppers Drug Mart
The equity analyst for a large investment bank is in the process of evaluating a potential takeover of Shoppers Drug Mart, Canada's largest drugstore retailer, by Loblaw Companies Limited, Canada's largest grocery retailer. Rumours of the takeover have been circulating for some time, and the analyst wants to provide her buy-side clients with both her comments on the proposed transaction and her assessment of a reasonable offering price.
Swot Analysis of "Loblaw Companies Limited - Acquiring Shoppers Drug Mart" written by James E. Hatch, Gina Kalboneh includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Loblaw Shoppers facing as an external strategic factors. Some of the topics covered in Loblaw Companies Limited - Acquiring Shoppers Drug Mart case study are - Strategic Management Strategies, and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Loblaw Companies Limited - Acquiring Shoppers Drug Mart casestudy better are - – talent flight as more people leaving formal jobs, there is increasing trade war between United States & China, geopolitical disruptions, increasing commodity prices, cloud computing is disrupting traditional business models, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing household debt because of falling income levels,
supply chains are disrupted by pandemic , customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of Loblaw Companies Limited - Acquiring Shoppers Drug Mart
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Loblaw Companies Limited - Acquiring Shoppers Drug Mart case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Loblaw Shoppers, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Loblaw Shoppers 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 - Acquiring Shoppers Drug Mart can be done for the following purposes –
1. Strategic planning using facts provided in Loblaw Companies Limited - Acquiring Shoppers Drug Mart case study
2. Improving business portfolio management of Loblaw Shoppers
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Loblaw Shoppers
Strengths Loblaw Companies Limited - Acquiring Shoppers Drug Mart | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Loblaw Shoppers in Loblaw Companies Limited - Acquiring Shoppers Drug Mart Harvard Business Review case study are -
Sustainable margins compare to other players in Finance & Accounting industry
– Loblaw Companies Limited - Acquiring Shoppers Drug Mart firm has clearly differentiated products in the market place. This has enabled Loblaw Shoppers to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Loblaw Shoppers to invest into research and development (R&D) and innovation.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Loblaw Shoppers digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Loblaw Shoppers 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.
Successful track record of launching new products
– Loblaw Shoppers has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Loblaw Shoppers 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.
Ability to lead change in Finance & Accounting field
– Loblaw Shoppers 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 Shoppers in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Diverse revenue streams
– Loblaw Shoppers is present in almost all the verticals within the industry. This has provided firm in Loblaw Companies Limited - Acquiring Shoppers Drug Mart 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.
Cross disciplinary teams
– Horizontal connected teams at the Loblaw Shoppers 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.
Training and development
– Loblaw Shoppers 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 - Acquiring Shoppers Drug Mart 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.
Low bargaining power of suppliers
– Suppliers of Loblaw Shoppers in the sector have low bargaining power. Loblaw Companies Limited - Acquiring Shoppers Drug Mart has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Loblaw Shoppers to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– Loblaw Shoppers is one of the most innovative firm in sector. Manager in Loblaw Companies Limited - Acquiring Shoppers Drug Mart Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Learning organization
- Loblaw Shoppers 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 Shoppers is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Loblaw Companies Limited - Acquiring Shoppers Drug Mart Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Organizational Resilience of Loblaw Shoppers
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Loblaw Shoppers does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High switching costs
– The high switching costs that Loblaw Shoppers 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.
Weaknesses Loblaw Companies Limited - Acquiring Shoppers Drug Mart | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Loblaw Companies Limited - Acquiring Shoppers Drug Mart are -
High bargaining power of channel partners
– Because of the regulatory requirements, James E. Hatch, Gina Kalboneh suggests that, Loblaw Shoppers 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.
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 Shoppers supply chain. Even after few cautionary changes mentioned in the HBR case study - Loblaw Companies Limited - Acquiring Shoppers Drug Mart, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Loblaw Shoppers vulnerable to further global disruptions in South East Asia.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Loblaw Companies Limited - Acquiring Shoppers Drug Mart, is just above the industry average. Loblaw Shoppers needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Loblaw Companies Limited - Acquiring Shoppers Drug Mart, in the dynamic environment Loblaw Shoppers has struggled to respond to the nimble upstart competition. Loblaw Shoppers has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow decision making process
– As mentioned earlier in the report, Loblaw Shoppers 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 Shoppers 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Loblaw Shoppers is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Loblaw Companies Limited - Acquiring Shoppers Drug Mart can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High operating costs
– Compare to the competitors, firm in the HBR case study Loblaw Companies Limited - Acquiring Shoppers Drug Mart 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 Shoppers 's lucrative customers.
No frontier risks strategy
– After analyzing the HBR case study Loblaw Companies Limited - Acquiring Shoppers Drug Mart, it seems that company is thinking about the frontier risks that can impact Finance & Accounting 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.
Capital Spending Reduction
– Even during the low interest decade, Loblaw Shoppers has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Slow to strategic competitive environment developments
– As Loblaw Companies Limited - Acquiring Shoppers Drug Mart HBR case study mentions - Loblaw Shoppers 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.
Skills based hiring
– The stress on hiring functional specialists at Loblaw Shoppers 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.
Opportunities Loblaw Companies Limited - Acquiring Shoppers Drug Mart | 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 - Acquiring Shoppers Drug Mart are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Loblaw Shoppers is facing challenges because of the dominance of functional experts in the organization. Loblaw Companies Limited - Acquiring Shoppers Drug Mart 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Loblaw Shoppers can use these opportunities to build new business models that can help the communities that Loblaw Shoppers operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
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 Shoppers 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.
Loyalty marketing
– Loblaw Shoppers has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Buying journey improvements
– Loblaw Shoppers can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Loblaw Companies Limited - Acquiring Shoppers Drug Mart 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.
Using analytics as competitive advantage
– Loblaw Shoppers 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 - Acquiring Shoppers Drug Mart - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Loblaw Shoppers to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Loblaw Shoppers 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 Shoppers 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Loblaw Shoppers can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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 Shoppers in the consumer business. Now Loblaw Shoppers can target international markets with far fewer capital restrictions requirements than the existing system.
Low interest rates
– Even though inflation is raising its head in most developed economies, Loblaw Shoppers 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Loblaw Shoppers in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Loblaw Shoppers 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 Shoppers to hire the very best people irrespective of their geographical location.
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 Shoppers can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats Loblaw Companies Limited - Acquiring Shoppers Drug Mart 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 - Acquiring Shoppers Drug Mart are -
Shortening product life cycle
– it is one of the major threat that Loblaw Shoppers is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– Loblaw Shoppers 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 Shoppers can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Regulatory challenges
– Loblaw Shoppers 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 Finance & Accounting industry regulations.
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 Shoppers in the Finance & Accounting sector and impact the bottomline of the organization.
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 Shoppers.
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 Shoppers 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.
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 Shoppers business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Loblaw Shoppers in the Finance & Accounting industry. The Finance & Accounting 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.
High dependence on third party suppliers
– Loblaw Shoppers 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.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Loblaw Shoppers with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
Technology acceleration in Forth Industrial Revolution
– Loblaw Shoppers has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Loblaw Shoppers needs to keep up with the evolution of technology in the Finance & Accounting 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.
Weighted SWOT Analysis of Loblaw Companies Limited - Acquiring Shoppers Drug Mart 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 - Acquiring Shoppers Drug Mart 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 - Acquiring Shoppers Drug Mart 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 - Acquiring Shoppers Drug Mart 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 - Acquiring Shoppers Drug Mart 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 Shoppers needs to make to build a sustainable competitive advantage.